IDC Survey of Law Editorial Board Geoffrey M. Waguespack, Editor-in-Chief Butler Pappas Weihmuller Katz Craig LLP, Chicago 312-456-0900,
[email protected] Nicole D. Milos, Managing Editor Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago 312-980-3024,
[email protected] Sarah Condon Captive Resources, LLC, Schaumburg Donald J. O’Meara, Jr. Pretzel & Stouffer, Chartered, Chicago William K. McVisk Johnson & Bell, Ltd., Chicago Kimberly A. Ross Butler Pappas Weihmuller Katz Craig LLP, Chicago
Contributors Denise Baker-Seal Brown & James, P.C. Kathryn I. Beck Brady, Connolly & Masuda, P.C. Justin K. Beyer Seyfarth Shaw LLP Julie A. Bruch O’Hallaron Kosoff Geitner & Cook, LLC Jeremy T. Burton Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. Adam C. Carter Cray Huber Horstman Heil & VanAusdal LLC Molly P. Connors Brady, Connolly & Masuda, P.C. R. Mark Cosimini Rusin & Maciorowski, Ltd. James L. Craney Lewis Brisbois Bisgaard & Smith, LLP Donald Patrick Eckler Pretzel & Stouffer, Chartered Dustin S. Fisher Judge, James & Kujawa, LLC John D. Hackett Cassiday Schade LLP Howard L. Huntington Bullaro & Carton, P.C. Erica S. Longfield Swanson, Martin & Bell, LLP Andrew R. Makauskas Brady, Connolly & Masuda, P.C. Mark McClenathan Heyl, Royster, Voelker & Allen, P.C. Jack J. Murphy Clausen Miller, P.C. Bradley C. Nahrstadt Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. John M. O’Driscoll Tressler LLP John J. O’Malley Seyfarth Shaw LLP Cecil E. Porter III Litchfield Cavo LLP Kimberly A. Ross Butler Pappas Weihmuller Katz Craig LLP William H. Schramm, III Cassiday Schade LLP Brian R. Shoemaker State Farm Mutual Automobile Insurance Company Scott D. Stephenson Litchfield Cavo LLP David J. Sullivan Schuyler, Roche & Crisham, P.C. W. Scott Trench Brady, Connolly & Masuda, P.C. Heather R. Watterson CNA Kenneth F. Werts Craig & Craig, LLC Jennifer A. Winking Scholz, Loos, Palmer, Siebers & Duesterhaus LLP Robert J. Winston Brady, Connolly & Masuda, P.C. David G. Wix Tarpey Wix LLC
contents 4 6 7
IDC Officers and Directors 2014–2015 President’s Message Letter from the Editors
Survey of Cases 9 17 24 28 38 52 58 93 100
Civil Practice Commercial Law Construction Law Employment Law Insurance Law Local Government Law Tort Law Index of Cases Index of Advertisers
2014 Survey of Law is published by the Illinois Association of Defense Trial Counsel, Springfield, Illinois. It is published annually as a service to its members. Subscription for non-members is $100. Subscription price for members is included in membership dues. Requests for subscriptions or back issues should be sent to the Illinois Association of Defense Trial Counsel at
[email protected]. All materials have been edited and are the property of the Association, unless otherwise noted. Statements or expression of opinions in this publication are those of the contributors and not necessarily those of the Association or Editors. Illinois Association of Defense Trial Counsel, 2014 Survey of Law, Copyright © 2015 The Illinois Association of Defense Trial Counsel. All rights reserved. Reproduction in whole or in part without permission is prohibited. POSTMASTER: Send change of address notices to IDC Survey of Law, Illinois Association of Defense Trial Counsel, P.O. Box 588, Rochester, IL 62563-0588. Second-Class postage paid at Springfield, IL and additional mailing offices.
IDC 2014 SURVEY OF LAW
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P.O. Box 588 Rochester, IL 62563-0588 800-232-0169 • 217-498-2649 FAX 866-230-4415
[email protected] www.iadtc.org
2014 – 2015 OFFICERS PRESIDENT DAVID h. LEVITT Hinshaw & Culbertson LLP, Chicago PRESIDENT-ELECT TROY a. BOZARTH HeplerBroom LLC, Edwardsville FIRST VICE PRESIDENT R. MARK MIFFLIN Giffin, Winning, Cohen, & Bodewes, P.C., Springfield SECOND VICE PRESIDENT MICHAEL L. RESIS SmithAmundsen LLC, Chicago SECRETARY/TREASURER BRADLEY C. NARHSTADT Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd., Chicago
2014 – 2015 Directors Laura K. Beasley Joley, Nussbaumer, Oliver & Beasley, P.C., Belleville
William K. McVisk Johnson & Bell, Ltd., Chicago
Joseph A. Bleyer Bleyer and Bleyer, Marion
Nicole D. Milos Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago
R. Mark Cosimini Rusin & Maciorowski, Ltd., Champaign
Donald J. O’Meara, Jr. Pretzel & Stouffer, Chartered, Chicago
Bruce Dorn Bruce Farrel Dorn & Associates, Chicago
Al J. Pranaitis Hoagland, Fitzgerald & Pranaitis, Alton Scott D. Stephenson Litchfield Cavo LLP, Chicago
Joseph G. Feehan Heyl, Royster, Voelker & Allen, P.C., Tracy E. Stevenson Peoria Robbins, Salomon & Patt, Ltd., Chicago Terry A. Fox Kelley Kronenberg, Chicago
Patrick W. Stufflebeam HeplerBroom LLC, Edwardsville
Edward K. Grassé DIRECTORS AT LARGE Busse, Busse & Grassé, P.C., Chicago Stephen G. Loverde Jennifer B. Groszek Law Office of Steven A. Lihosit, Chicago CNA, Chicago Heather R. Watterson Jennifer K. Gust CNA, Chicago Resolute Management, Inc., Chicago Paul R. Lynch Craig & Craig, LLC, Mt. Vernon
Past Presidents
EXECUTIVE DIRECTOR Sandra J. Wulf, CAE, IOM
Royce Glenn Rowe • James Baylor • Jack E. Horsley • John J. Schmidt • Thomas F. Bridgman • William J. Voelker, Jr. • Bert M. Thompson • John F. Skeffington • John G. Langhenry, Jr. • Lee W. Ensel • L. Bow Pritchett • John F. White • R. Lawrence Storms • John P. Ewart • Richard C. Valentine • Richard H. Hoffman • Ellis E. Fuqua • John E. Guy • Leo M. Tarpey • Willis R. Tribler • Alfred B. LaBarre • Patrick E. Maloney • Robert V. Dewey, Jr. • Lawrence R. Smith • R. Michael Henderson • Paul L. Price • Stephen L. Corn • Rudolf G. Schade, Jr. • Lyndon C. Molzahn • Daniel R. Formeller • Gordon R. Broom • Clifford P. Mallon • Anthony J. Tunney • Douglas J. Pomatto • Jack T. Riley, Jr. • Peter W. Brandt • Charles H. Cole • Gregory C. Ray • Jennifer Jerit Johnson • Stephen J. Heine • Glen E. Amundsen • Steven M. Puiszis • Jeffrey S. Hebrank • Gregory L. Cochran • Rick Hammond • Kenneth F. Werts • Anne M. Oldenburg • R. Howard Jump • Aleen Tiffany
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2014-2015
OFFICERS and DIRECTORS
President DAVID H. LEVITT
Hinshaw & Culbertson LLP, Chicago
President-Elect TROY A. BOZARTH HeplerBroom, LLC Edwardsville
LAURA K. BEASLEY Joley, Nussbaumer, Oliver & Beasley, P.C. Belleville
JOSEPH G. FEEHAN
Heyl, Royster, Voelker & Allen, P.C. Peoria
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First Vice President R. MARK MIFFLIN
Giffin, Winning, Cohen, & Bodewes, P.C. Springfield
JOSEPH A. BLEYER
Second Vice President MICHAELL. RESIS SmithAmundsen LLC Chicago
R. MARK COSIMINI
Secretary/Treasurer BRADLEY C. NAHRSTADT
Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. Chicago
BRUCE DORN
Bleyer and Bleyer Marion
Rusin & Maciorowski, Ltd. Champaign
Bruce Farrel Dorn & Associates Chicago
TERRY A. FOX
EDWARD K. GRASSé
JENNIFER B. GROSZEK
Kelley Kronenberg Chicago
Busse, Busse & Grassé, P.C. Chicago
CNA Chicago
JENNIFER K. GUST
Resolute Management, Inc. Chicago
PAUL R. LYNCH
Craig & Craig, LLC Mt. Vernon
STEPHEN G. LOVERDE
Law Office of Steven A. Lihosit Chicago
WILLIAM K. MCVISK Johnson & Bell, Ltd. Chicago
NICOLE D. MILOS
Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC Chicago
DONALD J. O’MEARA, JR. Pretzel & Stouffer, Chartered Chicago
TRACY E. STEVENSON
Robbins Salomon & Pratt, Ltd. Chicago
PATRICK W. STUFFLEBEAM HeplerBroom LLC Edwardsville
AL J. PRANAITIS
HEATHER R. WATTERSON
Hoagland, Fitzgerald & Pranaitis Alton
CNA Chicago
SCOTT D. STEPHENSON
SANDRA J. WULF, CAE, IOM
Litchfield Cavo LLP Chicago
IDC Executive Director Rochester
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President’s Message DAVID H. LEVITT Hinshaw & Culbertson LLP, Chicago
One of the IDC’s most important Core Values is: “IDC will provide programs and opportunities for professional development to assist members in better serving their clients.” It is part of our history and legacy; the IDC was originally formed 50 years ago as a way to better educate Illinois civil defense lawyers. For years, one of the most popular elements of our annual Spring Symposium has been the Updates on tort law and insurance coverage. This Survey of Law goes the Updates one better; it provides insight into Illinois-specific developments in the wide range of areas in which the IDC’s members practice. Written by members of the IDC’s Committees (Civil Practice, Commercial, Construction, Employment Law, Insurance, Local Government, and Tort Law), it provides the most comprehensive set of commentary on the recent decisions that can be found anywhere, in a format that makes it easy to locate what you need.
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Thanks and congratulations to the folks who spent so much time and effort putting this volume together. Particular thanks to our Managing Editor, Nicole Milos, for whom the Survey of Law is a labor of love. Without her effective and gentle urgings, this work would not exist. Nicole, of course, did not work on this project alone. Our Editorin-Chief, Geoffrey Waguespack, and the members of the editorial board, Sarah Condon, William McVisk, Donald O’Meara, Jr., and Kimberly Ross, contributed their time and considerable expertise to mold the disparate elements into a cohesive whole. Kudos to them as well. Many thanks to our many law firm and legal support providers for their sponsorship of this publication. We would not be able to publish such an important work each year without their support. It is very likely that you will be able to find the help you are looking for within the advertisements found in these pages. As always, you can also find services to fit your needs on our website at iadtc.org. Happy reading!
Letter from the Editors Geoffrey M. Waguespack Butler Pappas Weihmuller Katz Craig LLP, Chicago Nicole D. Milos Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago
The mission of the Illinois Association of Defense Trial Counsel is to ensure civil justice with integrity, civility, and professional competence. The IDC has adopted core values that are designed to establish the IDC as the voice of the defense bar in Illinois. These Core Values include: providing programs and opportunities for professional development to assist members in better serving their clients; increasing its role as the voice of the defense bar for Illinois to make the IDC more relevant to its members and the general public; and supporting diversity within the organization, the defense bar, and the legal profession. The Survey of Law strives to accomplish these three Core Values. The Survey provides a publication to aid in the professional development of its members and serves to provide a voice to the decisions that impact the IDC’s members and the general public. We strive to provide you, the reader, with diversity in topics, decisions, authors, editors, and sponsors. The IDC’s Core Values are not goals that can be met through a singular action. Rather, they are principles that apply to all of the IDC’s activities, discussions, and publications. We hope to continue to provide programs and publications in the future that continue to exemplify our Core Values. The 2014 Survey of Law demonstrates the IDC’s continued goal to provide educational programs that embody the IDC’s Core Values. This year’s publication addresses decisions in a wide array of practice areas, including insurance, employment, local government, tort, commercial law, construction, and civil practice. We are also grateful for the editorial board’s assistance. The editorial board is comprised of: Sarah Condon, William McVisk, Don O’Meara, and Kimberly Ross. We also wish to extend our thanks to the tireless efforts of our writers from the IDC’s committees. Finally, we wish to thank our sponsors. Without their support, the publication would not exist. We hope that you enjoy this publication, and we hope that you continue to consider the IDC the voice of the defense bar in Illinois.
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Survey of
Civil Practice Cases
A Contract Accrual Provision Is Enforceable to Bar a Third-Party Complaint against One of the Contracting Parties In 15th Place Condominium Association v. South Campus Development Team LLC, the plaintiff condominium association filed a lawsuit against a condominium developer for negligence and breach of fiduciary duty, alleging design and workmanship defects on September 4, 2008. South Campus Development Team LLC (South Campus), the developer, filed third-party claims against the architect, Fitzgerald Associates Architects P.C. (Fitzgerald), and the general contractor, Linn-Mathes, Inc. (Linn). The third-party complaint asserted claims of breach of contract, breach of the implied warranty of good workmanship, implied indemnity, and express indemnity. The implied warranty of good workmanship and the express indemnity claim were only applicable to Linn. Fitzgerald and Linn filed motions to dismiss on the grounds that South Campus’s claims were time-barred based upon cause of action accrual provisions in the respective contracts entered into by Fitzgerald and Linn with South Campus. Both contracts included provisions stating that all causes of action against Fitzgerald and Linn would accrue when substantial completion of the project was achieved. Substantial completion, according to both contracts, was to be determined by the architect, Fitzgerald. Specifically, the South Campus/Fitzgerald contract provided that Fitzgerald would determine the date of substantial completion and issue a final certificate of full payment upon compliance with the requirements of the contract documents. Similarly, the South Campus/Linn contract stated that, when the work or portion thereof was substantially complete, the architect would prepare a certificate establishing the date of substantial completion. On March 9, 2009, South Campus entered into a written tolling agreement with Fitzgerald and Linn that tolled “any and all claims or causes of action” that “had not expired as of the date of th[e tolling] agreement.” On June 21, 2011, South Campus filed its third-party complaint against Fitzgerald and Linn. The third-party complaint alleged claims for breach of contract and, alternatively, implied indemnity against Fitzgerald, as well as claims for breach of contract, breach of implied warranty of good workmanship, express indemnity, and, alternatively, implied indemnity against Linn.
Fitzgerald and Linn both filed motions to dismiss the third-party complaint, arguing that, under the cause of action accrual agreement in the contracts, any claims South Campus had against them accrued on the date of substantial completion, which occurred on May 16, 2003 for Tower 1 and October 11, 2004 for Tower 2. As such, Fitzgerald and Linn argued that the claims against them were barred by the four-year statute of limitations applicable to construction matters and, further, that the claims against them were time-barred when they entered into the 2009 tolling agreement. Both parties attached an affidavit from Michael DeRouin, Fitzgerald’s president, setting forth the dates of substantial completion.
Pursuant to the cause of action accrual agreement, the two-year period commenced on the date of substantial completion, with the latest date being October 11, 2004. Therefore, the limitation period on South Campus’s claims for implied indemnity expired on October 11, 2006, well before the March 9, 2009 tolling agreement, and were time-barred.
South Campus disputed the date of substantial completion, arguing it occurred in 2006. It submitted a counter-affidavit and argued that interpreting the contract to apply the cause of action accrual agreement to the implied indemnity claims was unreasonable because the limitation period applicable to implied indemnity claims could expire before South Campus knew it had a claim. Finally, South Campus argued that the express indemnity claim against Linn was subject to the 10-year statute of limitations applicable to written contracts. — Continued on next page
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Survey of 2014 Civil Practice Cases (Continued) The trial court found that the cause of action accrual period in the parties’ contracts applied to the third-party action. It applied the four-year statute of limitations to the third-party claims and determined that the date of substantial completion was October 11, 2004, at the latest, thus triggering the running of the statute of limitations. Thus, South Campus’s third-party claims against Fitzgerald and Linn were dismissed with prejudice. The Illinois Appellate Court First District found the terms of the accrual agreement to be enforceable contractual provisions. The appellate court considered South Campus’s argument that the counter-affidavit created a genuine issue of material fact as to the date of substantial completion. The appellate court rejected the argument, observing that the parties entered into contracts stating the date of substantial completion would be determined by the architect (Fitzgerald) and would be reflected in a certificate. The counteraffidavit did not effectively refute the date of completion set forth in Fitzgerald’s affidavit. Therefore, the appellate court affirmed the trial court’s finding of the dates of substantial completion. The appellate court then determined whether the statute of limitations had expired on South Campus’s third-party claims, noting that a party has two years from the date of service in the underlying action, or two years from the date the party knew or reasonably should have known of an act or omission giving rise to the action in order to file its cause of action for implied indemnity. Pursuant to the cause of action accrual agreement, the two-year period commenced on the date of substantial completion, with the latest date being October 11, 2004. Therefore, the limitation period on South Campus’s claims for implied indemnity expired on October 11, 2006, well before the March 9, 2009 tolling agreement, and were time-barred. The appellate court further found that because the parties agreed the breach of contract claims were governed by the four-year statute of limitations applicable to construction-related activity, those claims were time-barred because the statute of limitations expired on October 11, 2008, again prior to the March 9, 2009 tolling agreement. Finally, the appellate court found that the trial court improperly dismissed the express indemnity claim against Linn because it was governed by the 10-year statute of limitations applicable to written contracts rather than the four-year statute of limitations applicable to construction matters. In reaching this aspect of its opinion, the appellate court determined that the liability on the express indemnity claim emanated from a breach of a contractual obligation to indemnify and not from a construction-related activity. 15th Place Condo. Ass’n v. S. Campus Dev. Team LLC, 2014 IL App (1st) 122292.
A Response to Requests to Admit Mailed within 28 Days after Service Is Timely In Armagan v. Pesha, the Illinois Appellate Court First District reversed the trial court’s ruling that the defendants failed to serve a timely response to the plaintiff’s request to admit, concluding that a request is timely if it is placed in the mail within 28 days of service of the request. On November 18, 2010, the plaintiff mailed his request to admit to defendants. The defendants mailed their response on December 17, 2010. The trial court granted the plaintiff’s motion to deem the facts admitted because the court determined that, under Illinois Supreme Court Rule 12(c), the 28-day timeframe had started on November 22, 2010, four days after the request to admit was deposited in the mail. The trial court reasoned that the defendants had until December 20, 2010 to respond. The court interpreted the rule that service is not complete until four days after being mailed to apply to both plaintiff’s submission of the request and the defendants’ response. Because the defendants mailed their response on December 17, 2010, the trial court determined that service was not complete until December 21, 2010. Thus, the trial court held that the defendants were a day past the December 20, 2010 deadline. The appellate court reversed the trial court and held that the defendants filed a timely response under Illinois Supreme Court Rules 11, 12, and 216. Although the timeline began to run four days after the request was mailed, the appellate court found “nothing in Rule 216 [that required] the response to be received by the requesting party within 28 days of serving the request.” Additionally, the appellate court determined the trial court’s analysis to be flawed in that it was based on application of Rule 11 (method of service) rather than Rule 12 (proof of service). In viewing Rule 216, Rule 11, and Rule 12 together, the appellate court held that the 28-day timeframe began four days after the request was placed in the mail and that the responding party must place the response in the mail (if that is the method elected) within 28 days to comply with the deadline. Therefore, when defendants mailed the response on December 17, 2010, they were within the 28-day timeframe. The appellate court also determined that the trial court abused its discretion when it denied the defendants’ motion to reconsider based on the fact that a defendant submitted an affidavit stating he was out of town and was unable to sign the response until December 17, 2010. The appellate court noted this reason constituted good cause shown for an extension of time pursuant to Illinois Supreme Court Rule 183. The appellate court reiterated that requests to admit are discovery tools. It further emphasized that Illinois has a broad policy of preferring to rule on the merits of a case rather than on technicalities. Armagan v. Pesha, 2014 IL App (1st) 121840.
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Twenty-one Years to Serve Defendant in an Attempt to Revive a Judgment Is Too Long In Burman v. Snyder, the Illinois Appellate Court First District analyzed the revival of a judgment under Illinois law. The plaintiff obtained a judgment against the defendant arising out of a purported oral agreement for commissions in 1991. Nearly seven years later, in 1998, the plaintiff filed a petition to revive the judgment. The plaintiff, however, did not file a summons until 2011 and did not serve defendant until 2012, which was nearly 14 years after the petition to revive and over 20 years after the original judgment. Under 735 ILCS 5/12-108(a), no judgment shall be enforced after the expiration of seven years from the time the judgment is rendered, except upon revival of the same via 735 ILCS 5/2-1601, which abolished the common law revival method of scire facias. In its place, 735 ILCS 5/2-1602(a) instructs that a judgment may be revived by filing a petition to revive the judgment in the seventh year after its entry, or in the seventh year after its last revival, or in the 20th year after its entry, or at any other time within 20 years after its entry if the judgment becomes dormant. The appellate court found that the plaintiff failed to keep the 1991 judgment viable under the dictates of Section 2-1602 in two regards. He failed to file a second petition to revive the judgment within seven years after his 1998 attempt at revival, and he failed to file a petition to revive before the 20th anniversary of the 1991 judgment. The court noted that the 1998 petition did not make the judgment viable indefinitely and further noted that the 1998 petition did not toll the 20-year statute of limitations. Thus, the plaintiff’s petition to revive the judgment was dismissed. Finally, the appellate court agreed with the trial court’s finding that the plaintiff lacked the diligence required by Illinois Supreme Court Rule 103(b), but did not need to decide the issue. Burman v. Snyder, 2014 IL App (1st) 130772.
Where Defendant Fails to File Answer, Appellate Court Does Not Allow All Allegations of Complaint to be Deemed Admitted In Crawford County Oil, LLC v. Weger, the Illinois Appellate Court Fifth District was presented with three certified questions for interlocutory appeal pursuant to Illinois Supreme Court Rule 308: (1) Are factual allegations in a complaint which are not denied deemed admitted? (2) If a fact is deemed admitted in the pleadings, is the admission a judicial admission making it unnecessary for the party to introduce evidence in support thereof? (3) Does a trial court
have discretion to order a defendant, after the close of the plaintiffs’ case-in-chief, to make an initial answer to the plaintiffs’ complaint when the defendant had not previously answered the allegations in the complaint? The verified complaint alleged that the defendants ejected the plaintiffs, owners of oil and gas leases on the defendants’ properties, from their respective properties. The plaintiffs requested an injunction requiring the defendants to grant them access to the properties. The defendants filed a motion to dismiss and later a summary judgment motion. The summary judgment motion was denied, but the record contained no evidence that the motion to dismiss was ever ruled upon. Thus, the defendants never filed an answer. At trial, the plaintiffs requested leave of court to read the allegations of the complaint into the record as judicial admissions pursuant to 735 ILCS 5/2-610, because the defendants failed to answer. The trial court ruled that it had discretion to consider the allegations of the complaint as evidentiary admissions rather than judicial admissions, but because it wished to decide the case on substance rather than procedure, the court exercised its discretion to allow for the introduction of evidence to rebut the allegations of the complaint. Later, the court allowed the defendants to read admissions and denials of the complaint’s allegations into evidence. In response, the plaintiffs argued they would have to conduct discovery that they had not previously conducted due to what they characterized as the defendants’ admissions by failure to plead. The certified questions were then prepared for de novo review by the appellate court. The appellate court found 735 ILCS 5/2-610 to be inapplicable, as it does not mandate a finding that all allegations of a complaint are deemed admitted where there is a failure to plead at all, answering the first certified question in the negative, and rendering the second certified question moot. Finally, the appellate court noted that, while the defendants were correct that they were not given proper notice of the deadline for filing their answer, an answer should have been filed prior to trial. The plaintiffs, however, did not move to have the allegations deemed admitted until after they opened their case-inchief. Pursuant to Illinois Supreme Court Rule 183, the trial court had discretion to allow the late pleading, and the appellate court found that the trial court’s discretion to allow the defendants to do so appropriate, but with one correction: pleadings, by definition, are to be filed in writing, and the complaint was verified. As such, the case was remanded with directions to the trial court to amend its order to require the defendants’ answer be written, verified, and filed. Crawford Cnty. Oil, LLC v. Weger, 2014 IL App (5th) 130382.
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Survey of 2014 Civil Practice Cases (Continued)
Six-Year Attorney Statute of Repose Applies to Clients and Non-Clients Alike In Evanston Insurance Co. v. Riseborough, the Illinois Supreme Court held that the attorney statute of repose applies equally to clients and to non-clients. Section 13-214.3 of the Code of Civil Procedure sets forth a six-year statute of repose for “action[s] for damages based on tort, contract or otherwise . . . against an attorney arising out of an act or omission in the performance of professional services . . . .” 735 ILCS 5/13-214.3. At issue was an agreement executed among various insurers who settled a case on behalf of Kiferbaum Construction Company (Kiferbaum). Kiferbaum was insured under a policy of insurance issued by Statewide Insurance Company, but was also an additional insured under various policies held by subcontractors, including a policy issued by the plaintiff, Evanston Insurance Company. The underlying case was settled, and a “Fund and Fight Agreement” was executed. The Agreement was executed on October 23, 2000, and was signed by the various insurers and George Riseborough (the defendant attorney), purportedly as an agent of Kiferbaum. Kiferbaum denied that Riseborough had authority to execute the agreement. The agreement provided, in part, that the insurers reserved the right to litigate policy and coverage defenses among themselves. Statewide and Kiferbaum also agreed to reimburse the contributing insurers if their coverage positions were found to be valid. On December 22, 2005, Evanston filed its original complaint against the defendant attorney. Evanston alleged breach of implied warranty of authority, fraudulent misrepresentation, and negligent misrepresentation, based on Riseborough’s execution of the Agreement without authority. The trial court dismissed the claim without prejudice, finding that it was premature due to a pending coverage action. Then, on December 23, 2009, Evanston filed its second amended complaint against the defendant attorney, which the trial court dismissed under the six-year statute of repose. The dismissal was reversed by the Illinois Appellate Court First District. The Illinois Supreme Court relied on a plain language reading of Section 13-214.3, finding that there is “nothing in section 13-214.3 that requires the plaintiff to be a client of the attorney who rendered the professional services.” The supreme court further noted that the statute does not mention the word “client,” but rather applies to claims “arising out of an act of omission in the performance of professional services.” The supreme court also examined similar statutes and found its interpretation to be consistent with rulings by other Illinois courts. For example, in Hayes v. Mercy Hospital & Medical Center, 136 Ill.2d 450, 456–57 (1990), the Illinois Supreme Court ruled that the 12 | IDC 2014 SURVEY OF LAW
statute of repose for physicians applied to a third-party contribution claim. Evanston Ins. Co. v. Riseborough, 2014 IL 114271.
Vacatur of a DWP Allowed Despite a Mislabeled Petition to Vacate In Federal National Mortgage Association v. Tomei, the Illinois Appellate Court Second District analyzed whether it had jurisdiction to vacate a dismissal for want of prosecution, or “DWP,” in a residential mortgage foreclosure action. In the trial court, the plaintiff attempted to vacate a DWP via a motion pursuant to 735 ILCS 5/2-1401(a) five months after missing a status hearing. Despite the defendant’s motion to dismiss the plaintiff’s motion to vacate, the trial court granted the plaintiff’s motion, and the defendant appealed. A DWP is usually an interlocutory order for one year after the court enters it. Under 735 ILCS 5/13-217, a plaintiff has one year in which to re-file its complaint. During that one-year time period, a DWP is not final and appealable, and it becomes final and appealable only when the Section 13-217 period for re-filing expires. During the one-year time period, a DWP is subject to vacatur under 735 ILCS 5/2-1301(e), which provides that the court may, in its discretion, before final order or judgment, set aside any default, and may on motion filed within 30 days after entry thereof set aside any final order or judgment upon any terms and conditions that shall be reasonable. Section 2-1401, on the other hand, outlines a procedure by which a trial court may vacate a final judgment more than 30 days following its entry, if the petition to vacate is filed within two years after entry of the judgment. The appellate court noted that the plaintiff used the wrong vehicle—a Section 2-1401 petition rather than a Section 2-1301(e) petition—but followed the supreme court’s instructions in In re Haley D., 2011 IL 110886, that the character of a filing should be determined from its content, not its label. The plaintiff simply attempted to vacate a DWP within the timeframe allowed. The appellate court further noted that the trial court evaluated the motion as it would under Section 2-1301(e) and not under its Section 2-1401 label. The defendant filed her notice of appeal pursuant to Rule 304(b)(3), which confers appellate jurisdiction from a judgment granting or denying any relief prayed for in a Section 2-1401 petition. The appellate court ruled that, because the trial court’s granting of the motion produced an interlocutory order (effectively under Section 2-1301(e)) rather than a final order, the appeal under Rule 304(b)(3) was improper and the appellate court had no jurisdiction to review the decision. Federal Nat’l Mortg. Ass’n v. Tomei, 2014 IL App (2d) 130652.
Mesothelioma Diagnosed Over 25 Years after Asbestos Exposure Is a Non-Compensable Injury under Workers’ Compensation Act, Allowing Plaintiff to Sue Former Employer In Folta v. Ferro Engineering, an employee diagnosed with mesothelioma sued his former employer. The Illinois Appellate Court First District considered when an employee can sue his employer outside of the Illinois Workers’ Compensation Act, 820 ILCS 305/1, et seq., and the Workers’ Occupational Diseases Act, 820 ILCS 310/1, et seq., (“the Acts”) if the employee first learns of his injury after the statutes of repose expired. The plaintiff was diagnosed with mesothelioma in 2011 and claimed that he was exposed to asbestos while working for his former employer through 1970. He filed suit in 2011. The defendant filed a motion to dismiss, arguing that the action was barred by the parallel exclusive remedy provisions of the Workers’ Compensation Act, 820 ILCS 305/5(a), and the Workers’ Occupational Diseases Act, 820 ILCS 310/11. The plaintiff responded, citing exceptions to the exclusivity provisions for claims “not compensable under the Act[s].” He cited
the 25-year statute of repose that runs from the date of a worker’s last exposure to asbestos, arguing he had no remedy under the Acts. The plaintiff then argued that, under the exception for claims that are not compensable under the Acts, the exclusivity provision was not applicable, the statute of repose should be ignored, and a direct claim against the employer should be allowed. The trial court granted the employer’s motion to dismiss, finding that the running of a statute of repose does not render a cause of action non-compensable under the Acts. The appellate court noted that the Acts were designed to provide financial protection to workers for accidental injuries sustained at work and anticipated the tradeoff wherein liability without fault is imposed on employers and employees are prohibited from bringing common-law actions against the employers. The appellate court did note the exclusivity provisions of the Acts are not absolute. A commonlaw action may be maintained by an employer if (1) the injury was not accidental; (2) the injury did not arise from employment; (3) the injury was not received during the course of employment; or (4) the injury is “not compensable under the Act[s].” The plaintiff again argued that, because the actions were timebarred before he became aware of his injury, his injuries were “not — Continued on next page
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Survey of 2014 Civil Practice Cases (Continued) compensable under the Act[s]” and therefore should not be disallowed by the exclusive remedy provision. The appellate court examined the case of Toothman v. Hardee’s Food Systems, Inc., 304 Ill. App. 3d 521 (5th Dist. 1999), in which a group of employees were allowed to sue their employer for false imprisonment, assault, and battery after being strip-searched. The court held the “not compensable under the Act” exception applied because the damages consisted only of emotional suffering, as there were no medical damages or lost time claims. The Acts typically limit recovery to medical bills, rehabilitation-related costs, and temporary or permanent, partial or total disability. In analyzing the exceptions, the court found that denying the claim solely because it arose out of employment would eliminate the fourth exception to the Acts. The appellate court next examined Schusse v. Pace Suburban Bus Division of Regional Transportation Authority, 334 Ill. App. 3d 960 (1st Dist. 2002), involving a bus driver injured in a work accident. He originally sued the manufacturer of his bus and driver’s seat, but amended his claim with a spoliation claim against his employer after it replaced the seat. The appellate court noted that damages from spoliation are separate and distinct from damages for an underlying injury and found that the driver’s claim was “not compensable under the Act.” Applying the reasoning of Toothman and Schusse, the appellate court found that the plaintiff’s injury, because of its nature, was not compensable under the Acts. The plaintiff, through no fault of his own, never had an opportunity to seek compensation under the Acts. The appellate court held that the fourth exception allowed the plaintiff to circumvent the exclusivity bar and to bring a commonlaw suit against his employer. The appellate court also noted that its decision was consistent with two stated purposes of the Workers’ Compensation Act—to prevent double recovery and to prevent the proliferation of litigation. The appellate court concluded that its result met both prongs because the plaintiff could not recover under the Acts and would have only one avenue to recover against the employer. In response to the employer’s argument that such a decision would allow any employee whose workers’ compensation claim was denied to bring a common-law action, the appellate court stated that its ruling was confined to the scenario where an injured employee’s claim under the Acts is time-barred before the employee learns of it, thereby rendering it non-compensable under the Acts. The appellate court, therefore, held that the plaintiff’s claims against the former employer were not barred by the exclusivity provisions of the Acts. Folta v. Ferro Eng’g, 2014 IL App (1st) 123219.
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The Relation-Back Doctrine Cannot be Used to Revive an Untimely Claim under the Rights of Married Persons Act In Pirrello v. Maryville Academy, the plaintiff sued the defendant, a residential mental healthcare facility, for injuries she sustained when she jumped out of a window at the facility on August 2, 2005. The plaintiff was 16 years old at the time and turned 18 on July 17, 2007. She filed the lawsuit on July 16, 2009. Although the complaint alleged that the plaintiff incurred hospital, medical, and related expenses, it included no claim under the Rights of Married Persons Act (the Act), 750 ILCS 65/15(a)(1), for reimbursement of medical expenses incurred before the plaintiff turned 18 years old. The plaintiff did not join either of her parents as plaintiffs in the suit and did not allege that she was the assignee of her parents’ right to recover medical expenses for her care and treatment while she was a minor. The plaintiff later filed amended and second amended complaints, but neither pleading asserted claims under the Act, either in the name of the plaintiff’s parents or in her own right as an assignee. The medical expenses incurred while she was a minor were paid by Blue Cross Blue Shield, pursuant to a policy issued to her father.
[T]he appellate court stated that application of the relation-back doctrine in this case “would have the effect of reviving a time-barred claim that has never been owned by the only party-plaintiff and was never timely asserted by the claim’s owner.”
The defendant filed a motion for partial summary judgment seeking a determination that the plaintiff was not entitled to recover medical or other related expenses incurred from the date of the accident until she turned 18. The plaintiff then sought leave to file a third amended complaint adding her father as a plaintiff and asserting a claim under the Act. In response to the motion for summary judgment, the plaintiff argued that the claim under the Act should relate back to the filing of her original complaint because the defendant was on notice that she sought to recover all of her medical and related expenses. The plaintiff admitted that her father never assigned his
claim under the Act to her. The trial court granted the motion for partial summary judgment, holding that any claim under the Act was time-barred. In addition, the trial court denied the plaintiff’s motion for leave to file a third amended complaint adding her father as a plaintiff and asserting a claim under the Act. The plaintiff appealed the entry of partial summary judgment. The appellate court rejected her argument that the relation-back doctrine was applicable to her claim for medical and related expenses. In rejecting that argument, the appellate court observed that, absent an assignment from her father, the plaintiff never had a claim for medical expenses incurred when she was a minor, and thus lacked standing to pursue that claim. In addition, the appellate court stated that the owner of the claim, the plaintiff’s father, never pursued the claim and was precluded from doing so due to the expiration of the statute of limitations. Finally, the appellate court stated that application of the relation-back doctrine in this case “would have the effect of reviving a time-barred claim that has never been owned by the only party-plaintiff and was never timely asserted by the claim’s owner.” Thus, the partial summary judgment ruling was affirmed. Pirrello v. Maryland Acad., Inc., 2014 IL App (1st) 133964.
Judicial Estoppel and Plaintiffs’ Failure to Disclose Action in Bankruptcy Proceeding In Seymour v. Collins, the Illinois Appellate Court Second District held that the trial court properly granted summary judgment to the defendants, finding that the plaintiffs were judicially estopped from pursuing their action because of their failure to disclose the claim against the defendants in their bankruptcy proceeding. The plaintiffs filed a Chapter 13 bankruptcy petition that was subsequently amended on several occasions, after which one of the plaintiffs was injured, rendering him unable to work and resulting in the receipt of workers’ compensation benefits. A further modification of the bankruptcy petition was entered whereby the plaintiffs’ required payments were reduced. Subsequently, a lawsuit was filed in the Circuit Court of Winnebago County for damages resulting from the workplace injury, but was not disclosed to the bankruptcy court. As an initial matter, the appellate court that held there were two standards of review that could apply in this circumstance: de novo review, as it relates to the grant of summary judgment, and abuse of discretion as it relates to the application of the doctrine of judicial estoppel by the trial court. The appellate court held that, because there was no question of fact, only the abuse of discretion standard would apply in this case. The appellate court affirmed the application of judicial estoppel, ruling that each of the required elements had been established: (1) that the plaintiffs took two positions;
(2) that the positions were factually inconsistent; (3) that they were put forth in separate judicial proceedings; (4) that the plaintiffs intended for the trier of fact to accept the truth of the facts; and (5) that the plaintiffs had succeeded in the prior proceeding and obtained some benefit thereby. The appellate court also found there was no injustice by applying the doctrine because holding otherwise would permit the plaintiffs to abuse the judicial system for their own ends. What particularly troubled the appellate court was the plaintiffs’ failure to disclose the personal injury lawsuit to the bankruptcy court, despite having disclosed the lost income that resulted from the injury that the plaintiff suffered and the reduced payment plan obtained as a result. Seymour v. Collins, 2014 IL App (2d) 140100.
Delay of 16 Weeks to Issue Summons Violated Illinois Supreme Court Rule 103(b) In Wilder Chiropractic, Inc. v. State Farm Fire and Casualty Co., the Illinois Appellate Court Second District upheld the dismissal of the plaintiff’s complaint based upon the failure of the plaintiff to issue a summons to the defendant for over 16 weeks after the filing of the complaint. This action, which sought recovery against an insurer based upon a settlement in an underlying claim brought under the Telephone Consumer Protection Act, 47 U.S.C. § 227, against the insured for unsolicited fax transmissions that was decided in Wisconsin, was dismissed by the trial court based upon the doctrine of forum non conveniens and also pursuant to 735 ILCS 5/2-619(a)(3). After considering and rejecting the doctrine of forum non conveniens and the application of 735 ILCS 5/2-619(a)(3) as bases to support dismissal of the plaintiff’s complaint, the appellate court examined the defendant’s argument under Illinois Supreme Court Rule 103(b). The appellate court, finding that dismissal is appropriate based upon any basis present in the record, held that there is no absolute timeframe to support a motion under Rule 103(b) and the issue must be reviewed on a case-by-case basis. The plaintiff failed to provide any unusual circumstances that prevented it from promptly seeking to serve the defendant, who was an insurer and easy to locate and serve. Wilder Chiropractic, Inc. v. State Farm Fire & Cas. Co., 2014 IL App (2d) 130781.
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About the Authors Adam C. Carter is an associate with Cray Huber Horstman Heil & VanAusdal LLC in Chicago, Illinois. He focuses his practice in the areas of product liability, aviation litigation, professional liability, and commercial litigation. Mr. Carter is a member of the Illinois Association of Defense Trial Counsel and the Illinois State Bar Association. He earned his B.A. cum laude from Augustana College in 1998 and earned his juris doctorate cum laude from the University of Illinois College of Law in 2001. He was admitted to the Illinois Bar and United States District Court, Northern District of Illinois in 2001, and has been admitted pro hac vice to defend clients in numerous state and federal courts across the country. Mr. Carter is a former Monograph contributor to the IDC Quarterly and currently serves as the Vice Chair for the IDC’s Civil Practice Committee.
Scott D. Stephenson is a partner in the Chicago office of Litchfield Cavo LLP. Mr. Stephenson has more than 20 years of civil litigation and jury trial experience. He concentrates his practice in all areas of civil litigation with an emphasis on products liability, toxic tort, construction, and premises liability litigation, and is licensed to practice law in both Illinois and Missouri. Mr. Stephenson earned a Bachelor of Arts in political science from the University of Missouri and his law degree from the John Marshall Law School in Chicago. Mr. Stephenson is an active IDC member, having served as the Chair of the planning committee for the Annual Spring Defense Tactics seminar in 2008 and as Vice Chair in 2007 and 2011. In addition, he is a member of the Civil Practice and Procedure committee.
civil practice committee
Denise Baker-Seal is a partner in the Belleville, Illinois law firm of Brown & James, P.C. Her practice has focused on the defense of employment matters and catastrophic personal injury cases. She serves as Co-Chair of the Firm’s Employment Law Group. Ms. Baker-Seal has experience representing clients in state and federal courts, the EEOC, and state and local administrative agencies. She also serves as an arbitrator in the mandatory arbitration programs in St. Clair and Madison Counties. Prior to entering private practice, Ms. Baker-Seal served as judicial law clerk to the Honorable Lewis M. Blanton, U.S. Magistrate Judge. A graduate of Millikin University and Northeastern University School of Law, Ms. Baker-Seal is admitted to the bars of Illinois and Missouri and all federal courts in Illinois. Jeremy T. Burton is a partner with Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. and a member of the firm’s product liability and tort defense practice groups. He focuses his practice on defending product liability, premises liability, insurance coverage, and commercial matters in state and federal courts. He has written and spoken extensively, as well as represented settling plaintiffs and defendants with respect to the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). Mr. Burton graduated from the University of Wisconsin Law School in 2001, where he served as senior articles editor for the Wisconsin International Law Journal and a student judicial intern for Wisconsin Supreme Court Justice William A. Bablitch. He is admitted to the Illinois and Wisconsin bars and the U.S. District Court, Northern District of Illinois. Donald Patrick Eckler is a partner at Pretzel & Stouffer, Chartered. He practices in both Illinois and Indiana in the areas of commercial litigation, professional malpractice defense, tort defense, and insurance coverage. He earned his undergraduate degree from the University of Chicago and his law degree from the University of Florida. He is a member of the Illinois Association Defense Trial Counsel, the Risk Management Association, and the Chicago Bar Association. He is the co-chair of the CBA YLS Tort Litigation Committee. The views expressed in his article are his, and do not reflect those of his firm or its clients.
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Adam C. Carter, Chair Cray Huber Horstman Heil & VanAusdal LLC, Chicago 312-332-8505
[email protected]
Donald Patrick Eckler, Vice Chair Pretzel & Stouffer, Chartered, Chicago 312-578-7653
[email protected]
MEMBERS
Denise Baker-Seal Brown & James, P.C. Jeremy T. Burton Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. Bill Busse Busse, Busse & Grassé, P.C. Kimberly A. Davis Momkus McCluskey LLC Mandi Ferguson Swanson, Martin & Bell, LLP David R. Ganfield
Edward T. Graham, Jr. Beavers Graham & Calvert
Edward K. Grassé Busse, Busse & Grassé, P.C.
Matthew L. Johnson Johnson & Bell, Ltd.
Michael T. Kokal Heyl, Royster, Voelker & Allen, P.C. William K. McVisk Johnson & Bell, Ltd. Peter Naylor Brown, Hay & Stephens, LLP Robert H. Sands HeplerBroom LLC
Scott D. Stephenson Litchfield Cavo LLP
David G. Wix Tarpey Wix LLC
Survey of
Commercial Law
Illinois Appellate Court Declares Contracts Terminable Only by Parties’ Mutual Agreements to be Terminable At Will
Complaint against U.S. Companies Dismissed where Ukrainian Company Was the Real Party in Interest
In Rico Industries, Inc. v. TLC Group, Inc., the Illinois appellate court confirmed that contracts terminable only by the mutual agreement of the parties are contracts of indefinite duration, and thus, terminable at will. The plaintiff, Rico Industries, Inc. (Rico), entered into an agreement with defendant, TLC Group, Inc. (TLC), making TLC the exclusive sales representative of its products to Wal-Mart Stores, Inc. (Wal-Mart), and its affiliates and subsidiaries. The agreement included a provision that stated that the contract could only be terminated by the written agreement of both parties. Rico filed a declaratory judgment action, seeking a judgment that the agreement was terminable at will because the termination provision created a perpetual contract that was contrary to Illinois public policy. The trial court granted TLC’s motion for judgment on the pleadings and found that the termination provision was not unenforceable as a matter of public policy. The trial court certified the following question for review:
In Saletech, LLC v. East Balt, Inc., a case involving causes of action frequently encountered in the commercial law context, the Illinois appellate court affirmed the dismissal of a complaint by a Ukrainian company in a contract action for failing to state a cause of action for breach of contract under theories of agency, ratification, and alter ego. The court also found that the complaint failed to state claims for promissory estoppel and unjust enrichment. After an agreement governed by Ukrainian law to distribute bakery products made by a Ukrainian company went sour, the plaintiff, also a Ukrainian company, sued for breach of contract but never served the complaint on the Ukrainian distributor, EB Ukraine. Instead, the plaintiff pursued three American companies, including EB, Inc. and EB Europe, LLC (an Illinois limited liability company), that were not signatories to the contract, asserting theories of agency, contract ratification, alter ego, promissory estoppel, and unjust enrichment. The trial court granted defendants’ motion to dismiss the third amended complaint under Section 2-615 of the Illinois Code of Civil Procedure, 735 ILCS 5/2-615, with prejudice. The agency claim was rejected because the plaintiff failed to allege any facts showing that EB Ukraine was acting as an agent for EB, Inc. when it signed the distribution agreement. The apparent authority claim also failed because the plaintiff failed to allege facts showing that EB, Inc. consented to or knew that EB Ukraine entered into the agreement on its behalf, that plaintiff had a good faith belief that EB Ukraine had authority to bind EB, Inc. or that the plaintiff relied on EB Ukraine’s authority to its detriment. The dismissal of the ratification claim was affirmed because the plaintiff had failed to allege any facts that the defendants retained any benefits of the agreement or took steps showing an intent to be bound by it once they learned of the agreement through notification of the breach by the plaintiff. Absent any allegations of benefits or intent to be bound, a ratification claim cannot stand. The alter ego claim was found to be lacking as well, even though the plaintiff alleged that EB Ukraine was the alter ago of EB Europe, because the two entities had commingled funds as a means of defrauding creditors, had a unity of interests so that their separate identities ceased, and had the same Chicago business ad-
“Does a sales representative agreement that can only be terminated upon the express written consent of both parties contain a specific objective event that renders the agreement sufficiently definite in duration such that it is not terminable at will?” On appeal, the court reversed the trial court’s decision and held that the termination provision violated public policy against perpetual contracts. Noting the long tradition of upholding the right of parties to freely contract, the appellate court, relying on the Illinois Supreme Court’s decision in Jespersen v. Minnesota Mining Manufacturing Co., 183 Ill. 2d 290 (1998), determined that perpetual contracts violated Illinois public policy. It then analyzed the termination provision of the sales representative agreement at issue and determined that it was only terminable by the written consent of the parties. As a result, the appellate court found the agreement’s duration to be indefinite and therefore terminable at will. Rico Indus., Inc. v. TLC Grp., Inc., 2014 IL App (1st) 131522.
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Survey of 2014 Commercial Law Cases (Continued) dress. The appellate court found that the plaintiff could not sustain these claims without alleging the necessary facts to warrant piercing the corporate veil. With regard to the promissory estoppel claim, the appellate court noted that a party generally will be barred from seeking redress under that doctrine “where the performance which is said to satisfy the requirement of detrimental reliance is the same performance which supplies the consideration for [a] contract.” As a result, the existence of the distribution agreement itself barred the plaintiff’s claim for promissory estoppel. Finally, the appellate court held that, without any allegations that the defendants obtained any benefit from the plaintiff’s assistance in the investigation of EB Ukraine’s management, the claim for unjust enrichment failed as a matter of law. Saletech, LLC v. E. Balt, Inc., 2014 IL App (1st) 132639.
Unjust Enrichment Claim Allowed Despite Express Contract In C. Szabo Contracting, Inc. v. Lorig Construction Co., a subcontractor sought to recover under an unjust enrichment theory from a general contractor for work performed by the subcontractor pursuant to an express contract with another subcontractor. After a trial, the trial court concluded that the subcontractor could recover from the general contractor under an unjust enrichment theory, despite an expressed contract with another subcontractor governing the same work where the general contractor enticed the subcontractor to do the work for guaranteed payment. The plaintiff general contractor appealed. Lorig Construction Co. (Lorig) was hired by the Illinois State Toll Highway Authority for a construction project. Lorig subcontracted with JLA Construction, Inc. (JLA) for a portion of the work. JLA, in turn, subcontracted with C. Szabo Contracting, Inc. (Szabo) to perform certain pipe-jacking work. Szabo did the work but was not paid. Rather than sue JLA, the party with which it had a contract, Szabo sued the general contractor under an unjust enrichment theory. Unjust enrichment is not an independent cause of action, but rather a remedy that can be based on, among other theories, a contract implied in law. A contract implied in law, or a quasi-contract, is one in which no actual agreement exists between the parties but a duty is imposed to prevent unjustness. Generally, to be entitled to a remedy of unjust enrichment in a quasi-contract action, a plaintiff must show that he or she furnished valuable services or materials and that the defendant received them under circumstances that would make it unjust to retain the benefit. It is insufficient that a defendant has received a benefit. Rather, circumstances must exist such that the 18 | IDC 2014 SURVEY OF LAW
defendant’s retention of the benefit would violate the fundamental principles of justice, equity, and good conscience. Ordinarily, the remedy of unjust enrichment based on a quasicontract is not available when an express contract exists concerning the same subject matter. Instead, when work is done under a contract, the suit generally must be between the parties to the contract. Simply because a third party has benefited from the work does not make that third party liable. In other words, a party performing pursuant to a contract who is disappointed by its co-party’s failure to pay generally cannot turn to a third party for compensation. For legal and factual reasons, the appellate court rejected the trial court’s conclusion that quasi-contractual relief is available in the face of an expressed contract when a general contractor either has enticed a subcontractor to perform or has given a subcontractor a reasonable expectation of payment. The appellate court then considered whether a party to a contract may pursue quasi-contractual relief against a non-party to the contract on the basis that the nonparty requested and received a benefit but has paid no one for it. No Illinois case has addressed that issue. After reviewing a number of decisions from other jurisdictions and having weighed the various considerations for and against permitting quasi-contractual relief in that situation, the court concluded that: Lorig’s retention of the benefit of the pipe-jacking without paying anyone for it constitutes unjust enrichment and that Szabo’s subcontract with JLA is not a barrier to recovery. Most importantly, Lorig received the exact performance that it requested and agreed to pay for, and it does not dispute that it paid no one for the work. Requiring Lorig to compensate Szabo for the pipe-jacking results in no unfairness or “forced exchanged,” because Lorig is paying for the exact service it requested at the price it agreed to pay. The court affirmed the trial court’s judgment in favor of Szabo. C. Szabo Contracting, Inc. v. Lorig Constr. Co., 2014 IL App (2d) 131328.
A Contractual Venue Provision Trumps Illinois Venue Statute and Forum Non Conveniens Policy Saba Software, Inc. v. Deere and Company considered whether a contractual venue provision trumps the Illinois venue statute and the forum non conveniens policy. Saba Software and Deere and Company had entered into a contract for software services. When
a dispute arose over the agreement, Deere sued Saba in the U.S. District Court for the Northern District of Illinois. After Saba moved to dismiss the federal court action based on lack of diversity, Deere dismissed the federal court action. Saba then sued Deere in the Circuit Court of Cook County. Deere moved to transfer the case to Rock Island County based on the Illinois venue statue, Section 2-104 of the Code of Civil Procedure, 735 ILCS 5/2-104. In the alternative, Deere argued that if venue is proper in Cook County, the action should be transferred to Rock Island County based upon the doctrine of forum non conveniens, Ill. S. Ct. R. 187. The trial court denied Deere’s motion and Deere filed an interlocutory appeal. The contract between the parties for the software contained a provision entitled “Venue,” which stated: The parties consent to the exclusive jurisdiction of, and venue in, any federal or state court of competent jurisdiction located in Illinois for the purposes of adjudicating any matter arising out of or relating to this Agreement. Deere argued that the venue selection clause in the agreement does not trump the Illinois venue statute because doing so would be contrary to both case law and common sense. It argued, in the alternative, that even though venue is proper in Cook County, the case should be transferred to Rock Island County based on the doctrine of forum non conveniens. The appellate court noted that courts are traditionally reluctant to relieve parties of their contractual agreements, especially when they drew up a provision and obtained the consent of the other party. Venue is fundamentally a matter for the convenience of the litigants and is not jurisdictional in nature. It can be waived under Section 2-104(b) of the Code of Civil Procedure, 735 ILCS 5/2104(b), by failure to assert in a timely fashion and can be waived by the parties. It can also be waived by agreement. When a party places a venue provision in a contract and the other party agrees, it would be fundamentally unfair to later allow the party that had placed it in the contract to complain that the clause is void and against public policy. The court noted that when a venue waiver clause is placed in a form contract and affects the due process rights of others, a waiver clause can be contrary to public policy. In this case, however, the agreement was not a boiler plate agreement issued to people all over the state or the nation. The waiver clause was prepared by Deere and agreed to by Saba. The majority rule recognized in Illinois and in most jurisdictions provides that parties should be free and unrestricted in making their own contracts. Illinois public policy strongly favors freedom to contract and broadly allows parties to determine their contractual
obligations. As a result, the court concluded that the parties waived venue in their contract and that Cook County was a proper place to bring the action. Forum non conveniens is an equitable doctrine founded in the consideration of fundamental fairness and the sensible and effective administration of justice. The doctrine permits a trial court to transfer a case when trial in another forum would better serve the ends of justice. For the same reasons outlined above, the appellate court concluded that Deere had expressly waived the doctrine of forum non conveniens. The appellate court affirmed the trial court’s denial of Deere’s motion to transfer. Saba Software, Inc. v. Deere & Co., 2014 IL App (1st) 132381.
Bank Contractual Provisions Trump Uniform Commercial Code In Aliaga Medical Center, S.C. v. Harris Bank N.A., the plaintiff sought the reimbursement of $50,000 from the bank that had allegedly improperly honored a check including a notation that the check was “void after 90 days.” The bank moved to dismiss the complaint on the basis that the claim was barred by the terms of the parties’ written deposit account agreements. The trial court granted the motion of the bank, and the plaintiff appealed. Under the written agreement between the plaintiff and the bank, if the plaintiff did not want the bank to pay a check it had written, then the plaintiff had to comply with certain requirements. In particular, the plaintiff was required to provide the bank with the account number, the number and date of the check, the name of the payee and the amount of the check by a certain deadline and pay a stop payment fee. Without the required stop payment order, the bank maintained its right to honor the check. The “void” language on the check was insufficient to stop payment because the written deposit agreement contained no exception for such language on checks. The plaintiff argued that it was not required to comply with those requirements because under Section 4-403(a) of the Uniform Commercial Code (UCC) it was only required to stop payment “in a time and manner that gives the bank a reasonable opportunity to comply.” 810 ILCS 5/4-403(a). The plaintiff argued that inserting the provision “void after 90 days” on the check complied with the UCC. The court noted that the UCC permits its provisions to be “varied by agreement.” 810 ILCS 5/4-103(a). It is a fundamental principle of banking law that the relationship between a bank and its depositor is created and regulated by the express contracts be— Continued on next page
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Survey of 2014 Commercial Law Cases (Continued) tween them. The appellate court concluded that the stop payment requirements in the plaintiff’s written deposit agreement with the bank superseded the UCC provision. The appellate court also concluded that, even if the plaintiff was correct that the stop payment provision of the written agreement was neither exclusive nor meant to override the UCC, the “void” notation on the plaintiff’s check was ineffective because it did not comply with Section 4-403(a) of the UCC by providing notice “at a time and in a manner that affords the bank a reasonable opportunity to act on it.” 810 ILCS 5/4-403(a). The plaintiff did not provide the check bearing the language “void” directly to the bank; it was first transmitted to the payee of the check. The plaintiff neither knew when the check would be received by the bank nor the means by which it would be processed once it was received. Because the information reviewed by the bank during its electronic processing of the check does not include the date the check was written, simply putting “void after 90 days” on a check is not a reasonable means by which to direct a bank to stop payment on a check. Finally, the appellate court concluded that the plaintiff’s complaint was barred by its failure to commence the lawsuit within one year from the date that the bank sent the statement informing the plaintiff that the check had been paid. Under the parties’ written agreement, the plaintiff agreed that it would not commence any legal action or proceeding against the bank regarding any error unless it did so “within one year” of the statement showing the transaction in question. In the instant case, the plaintiff filed the suit almost two years after the bank sent the plaintiff the statement indicating that the check had been paid. The plaintiff argued that the one-year limitation is procedurally unconscionable and that the three-year limitation period set forth in Section 4-111 of the UCC should apply. 810 ILCS 5/4-111. The court noted that it was common knowledge that account holders should review monthly bank statements to ensure against errors and rectify them promptly. The court concluded that there was nothing in the record to suggest that the one-year limitation period of the parties’ agreement was procedurally unreasonable or “overly harsh or one-sided” so as to be unenforceable in this case. The court affirmed the trial court’s dismissal of plaintiff’s complaint. Aliaga Med. Ctr., S.C. v. Harris Bank N.A., 2014 IL App (1st) 133645.
Bounced Check Does Not Void Release Rohr Burg Motors, Inc. v. Kulbarsh involved the validity of a release after the purchase of a used car went bad. The dealership sued the buyer for damages when the buyer did not promptly return the car after having his down payment returned and his loan 20 | IDC 2014 SURVEY OF LAW
canceled. The buyer filed a counterclaim against the dealership for fraud. The trial court found that the counterclaim was barred by a release signed by the buyer and dismissed the counterclaim. The buyer appealed. When the defendant purchased a used car from the plaintiff dealership, he told the dealership he wanted a vehicle without any history of collisions. He eventually purchased a vehicle from the dealership upon the representation of the dealership that there were no accidents or damage to the vehicle. The defendant paid $4,000 and financed the rest of the purchase through a bank. When the buyer later learned that the vehicle might have frame damage due to a major accident, he returned to the dealership. An agreement was eventually reached under which the defendant would return the car and the dealership would return the defendant’s down payment and pay off the bank loan. As part of the arrangement, the defendant signed a document entitled “General release” providing, in part: I, Bruce D. Kulbarsh . . . do hereby accept $21802.00, the repurchase amount and rescission of the contract, due to my concerns associated with the fact of a possible frame damage . . . of said vehicle. It is also understood that I, Bruce D. Kulbarsh do hereby acknowledge, remise, release, and forever discharge [the dealership] . . . from any and all obligations of any kind and nature that I may have against said [dealership] . . . because of anything done or omitted to be done by them from the beginning of the world to date hereof. The day after signing the release, the defendant was given a check by the dealership in the amount of his down payment. The defendant took off the license plates from the vehicle and left it at the dealership. When the defendant attempted to deposit the check with his bank later that day, however, he could not do so because there were insufficient funds to cover the check. The defendant then returned to the dealership, put his license plates back on the vehicle, and drove the vehicle home. The defendant returned to the bank “the next day or so” and successfully deposited the check for the down payment. The defendant also received notice from the bank that his loan had been paid off and the account closed. The plaintiff, however, did not return the vehicle after receiving his down payment and having the loan cancelled. When the vehicle was not returned, the dealership filed suit against the buyer seeking return of the vehicle and damages “as the vehicle is being diminished in value” and the buyer was “being unjustly enriched by using a car he has not paid for.” After returning the vehicle, the buyer filed a counterclaim against the dealership for breach of contract, fraud, and violation
of the Consumer Fraud Act. After discovery, the dealership moved for summary judgment with respect to the counterclaim. The court granted summary judgment on the counterclaim. The buyer appealed. The dealership argued that the general release barred the plaintiff’s counterclaim. The buyer argued that the release of claims in the general release was not enforceable due to lack of consideration. As with any contract, a release must be based upon consideration. Any act or promise that is a benefit to one party or a detriment to the other is a sufficient consideration to support a contract. Although some consideration is necessary, a court’s inquiry into whether a contract is supported by consideration does not extend to examining the adequacy of the consideration. It is not the court’s function to review the amount of consideration unless the amount is so grossly inadequate as to shock the conscience. The mere inadequacy of consideration, in the absence of fraud or unconscionable advantage, ordinarily is insufficient to justify setting aside a contract. Valid consideration exists for a release when a party promises not to file suit against another party in exchange for payment. The appellate court agreed with the trial court that the general release was supported by consideration consisting of the refund of the purchase price paid by the buyer and rescission of the purchase contract. The buyer argued that the refund and rescission referenced in the general release related only to the buyer’s agreement to return the vehicle and did not additionally constitute consideration for his release of claims against the dealership. The buyer argued that, because the cash amount in the general release was based on the purchase price of the vehicle, it could not serve as consideration to support any obligation from the buyer beyond his agreement to return the vehicle. Noting that it is not a reviewing court’s role to assess whether the amount of consideration was adequate, the court rejected that argument. The buyer also argued that the parties intended for the refund and rescission of the purchase price to serve as consideration only for the buyer’s agreement to return the vehicle. The court found no indication in the contract’s language that the refund and rescission of the purchase price were intended to serve as consideration only for the return of the vehicle. To the contrary, the general release provides that the buyer releases and discharges the dealership “from any and all obligations of any kind and nature that [the buyer] may have against said [dealership].” The court concluded that the release evidences the parties’ intention that the payment to buyer and the rescission of the original purchase price served as consideration for release of his claims. Finally, the buyer argued that, even assuming the release was initially valid, it was voided by the dealership’s failure to deliver a negotiable check. The buyer argued that, when a party has materially breached a contract, he cannot recover damage from the other party to the contract. The test of whether a breach is “material” is
whether it is so substantial and fundamental as to defeat the objective of the parties in making the agreement or whether the failure to perform renders performance of the rest of the contract different in substance from the original agreement. The breach must be so material and important that the injured party is justified in regarding the entire transaction to be at an end. The court concluded that, because the buyer received the full monetary consideration required by the general release within a short time period, any initial failure to provide a negotiable check would not constitute a material breach that would invalidate buyer’s obligations under the release. A slight delay of payment due under a contract that does not specify a time for payment will not constitute a material breach that excuses nonperformance by the other party. Even if the release was initially unenforceable, the buyer’s retention of the payment made to him independently ratified that release. If a releasor retains the consideration after learning that the release is voidable, continued retention of the benefits constitutes a ratification of the release. The court found that it was not disputed that the check to buyer cleared within a day or two following the execution of the general release and that the bank notified the buyer by letter that the dealership had satisfied its loan. The buyer admit— Continued on next page
IDC 2014 SURVEY OF LAW
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Survey of 2014 Commercial Law Cases (Continued) tedly retained the proceeds from the refund check. Even if the release was voidable, the court found that the buyer ratified the release by his retention of the consideration for his promise not to sue. The court affirmed the trial court’s award of summary judgment in favor of the dealership on the buyer’s counterclaim. Rohr Burg Motors, Inc. v. Kulbarsh, 2014 IL App (1st) 131664.
Grossly Inadequate Consideration to Support Agreement to Bequeath $5.5 Million In Dohrmann v. Swaney, the plaintiff sought enforcement of an agreement with an elderly widow to convey to the plaintiff upon the widow’s death her apartment, its contents, and $4 million, in return for the plaintiff incorporating the widow’s last name in the names of his children. The trial court granted summary judgment for the widow’s estate and the plaintiff appealed. The plaintiff first met Virginia Rogers in 1984. They lived in the same cooperative apartment building on Lake Shore Drive. When they met, Virginia Rogers was a 73-year-old widow. She had never had nor adopted any children. The plaintiff was a 40-year-old neurosurgeon who eventually had two children. The plaintiff and the widow began to socialize more frequently during the early 1990s and served on the board of the cooperative apartment building. The widow got to know the plaintiff’s wife and children during this time. According to the appellate court, from the record, it appeared the widow initially enjoyed the plaintiff’s attention, but then became concerned that he was befriending her in order to get her property upon her death. At one point, the plaintiff approached the widow about adult adoption, suggesting that one of them adopt the other. Later, the plaintiff met with an estate planning attorney and asked what one would do if he wished to receive something in exchange for something after a person died. Eventually, the plaintiff drafted an agreement which read, in part: In exchange for your past and future services and other good and valuable consideration (including helping the Rogers name to continue after my death by incorporating it into your children’s names), I (Virginia H. Rogers) agree to give you (George J. Dohrmann, III) upon my death 1) my apartment . . . and all furniture, furnishings, personal effects and other property contained within it . . . 2) the sum of four million dollars ($4,000,000), and so will provide in my Last Will and Testament or other testamentary substitute that may take effect upon my death (my ‘testamentary documents’). If my testamentary documents fail to provide
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you with the above, you or your estate, shall have a valid claim against my estate for such amount. The widow, who was 89 years old at the time, signed the contract. There were no witnesses present at the signing. The widow did not communicate with her long-time lawyer and advisor regarding the contract. Two months later, the plaintiff legally changed the names of his two children to include “Rogers” as one of their middle names. The names became George John Rogers Dohrmann, IV and Geoffrey Edward David Rogers Dohrmann. The boys used the Rogers name inconsistently. The plaintiff eventually filed a declaratory judgment action, asking the court to settle the rights of the parties under the contract and imposing a constructive trust on the widow’s apartment and $4,000,000 worth of assets for the benefit of the plaintiff. The widow’s estate filed a counterclaim, alleging that the contract was a product of fraud in the execution and asking the court to declare the contract invalid and unenforceable. Both sides moved for summary judgment. The court denied the plaintiff’s motion for summary judgment and granted the estate’s motion for summary judgment, finding the contract unenforceable. The basic requirements of a contract are an offer, acceptance, and consideration. The determination of whether consideration is sufficient to support a contract is a question of law for the court to decide. When the amount of consideration is so grossly inadequate as to shock the conscience of the court, the contract will fail. A contract may be considered as unconscionable when it is improvident, oppressive, or totally one-sided. Factors relevant to finding a contract unconscionable include gross disparity in the values exchanged or gross inequality in the bargaining position of the parties together with terms unreasonably favorable to the stronger party. Where the amount of the consideration which passed is not only so grossly inadequate as to shock the conscience of the court, but also accompanied by circumstances of unfairness, the court is in a position to set aside the transaction. The appellate court found that the circumstances existing when the contract was entered into were such that the contract was void due to the grossly inadequate consideration provided the widow from the plaintiff, as well as the unfair circumstances surrounding the contract’s creation. The sole consideration the plaintiff agreed to give in exchange for over $5.5 million in assets was to add Rogers as an additional middle name to his sons’ names. According to the contract, the addition of ‘Rogers’ to the boys’ names constituted a value to the widow because it would help the Rogers name to continue after the widow’s death. The appellate court concluded that the widow did not gain much by the addition of the Rogers name to the boys’ middle names. Changing only the
middle names could hardly be said to perpetuate the Rogers name after the widow’s death. Additionally, the contract did not contain any provision mandating how, when or whether Dohrmann’s sons were to use the Rogers name. The plaintiff argued that it is appropriate for a court to consider whether consideration was provided in the contract, but improper for a court to consider the relative value or adequacy of the consideration. The appellate court rejected that argument, holding that where the consideration provided is so grossly inadequate as to shock the conscience, a court may examine the adequacy of the consideration. The court noted that the contract made no provision for when or even if the boys must actually use the name Rogers. There was nothing in the contract to prevent the boys from legally removing Rogers as a middle name. The court concluded that, where the consideration for a contract is illusory, the contract will be invalidated for gross inadequacy of consideration. Because enforcing the obligation to use the Rogers name as to the minor children is a legal impossibility, the court concluded that the consideration in the contract at issue was illusory. The disparity between what the plaintiff received and what the window received was shocking on its face. The court agreed with the trial court’s finding that the consideration “seems to be so minimally beneficial to [the widow] . . . to be almost nonexistent.” Although the inadequacy of consideration is sufficient in itself to find the contract void, the court also found that there were circumstances of unfairness surrounding the execution of the contract to such an extent that the contract could be found void on those grounds, as well. The court found that many of the uncontested facts clearly demonstrate circumstances of unfairness surrounding the execution of the contract. At the time of the contract’s execution, the widow was 89 years old and her husband had been dead for many years. Two years following the execution of the contract, the widow was diagnosed with Alzheimer’s disease. She had no children, nor any immediate family. She was entering into a contract worth $5.5 million with the plaintiff, a physician. The widow did not consult with her long-time attorney and advisor regarding the execution of the contract. The other contracting party, the plaintiff, was a highly educated neurosurgeon, married with a family. Under the contract, the plaintiff stood to reap a benefit worth $5.5 million. Prior to entering into the contract, the plaintiff consulted with an estate planning attorney. The plaintiff’s attorney drafted a “skeleton” agreement for him. The court found those facts clearly show that the creation of the instant contract involved gross inadequacy of consideration, as well as circumstances of unfairness. The appellate court affirmed the grant of summary judgment in favor of the estate.
About the Authors John J. O’Malley is a partner in the Chicago office of Seyfarth Shaw LLP and has over 35 years of experience in commercial litigation, professional liability, product liability, and tort defense. Mr. O’Malley is the current vice chair of the Commercial Law Committee and the past co-chair of the Civil Practice Committee of the IDC, a past chair of the Civil Practice Committee of the Chicago Bar Association, and a past chair of the Insurance Law Section Council of the Illinois State Bar Association. He is a member of the DRI and the Litigation and Tort and Insurance Practice Sections of the American Bar Association and the Lawyer’s Club of Chicago. Mr. O’Malley received his undergraduate degree from the College of the Holy Cross and received his J.D., cum laude, from DePaul University where he was a member of the law review. A former law clerk for Justice John J. Stamos of the Illinois Appellate Court, Mr. O’Malley has served as a lecturer at the John Marshall School of Law. He is the author of a number of articles on litigation and tort law and is a frequent workshop panelist and lecturer on litigation. David G. Wix is a partner at Tarpey Wix LLC and concentrates his trial practice on complex commercial litigation disputes, including breach of contract, breach of warranty, fraud and related business torts, trade secret misappropriation, fiduciary wrongdoing, partnership and joint venture disputes, and distributor disputes. Many of these litigation matters involve requests for extraordinary equitable remedies, such as injunctive relief. His trial practice also focuses on defending manufacturers involved in product liability lawsuits, and he routinely advises manufacturers on product recall and product safety-related issues. Mr. Wix obtained his J.D. from Chicago-Kent College of Law and his undergraduate degree from Princeton University.
COMMERCIAL law committee John J. O’Malley, Chair Seyfarth Shaw LLP, Chicago 312-460-5514
[email protected]
David G. Wix, Vice Chair Tarpey Wix LLC, Chicago 312-948-9093
[email protected] MEMBERS
P. Patrick Cella Jason Johnson Martin J. O’Hara Cecil E. Porter, III Bruce Schoumacher
The Law Offices of Edward J. Kozel HeplerBroom LLC Much Shelist, P.C. Litchfield Cavo LLP Querrey & Harrow, Ltd.
Dohrmann v. Swaney, 2014 IL App (1st) 131524. IDC 2014 SURVEY OF LAW
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Survey of
Construction Law Cases
General Contractor Retained Sufficient Control Over Subcontractor’s Work to Give Rise to Both Direct and Vicarious Liability under Restatement (Second) of Torts Section 414 The plaintiff in Ramirez v. FCL Builders, Inc. was injured while working as a roofer for Sullivan Roofing, Inc. (Sullivan). The plaintiff filed a lawsuit against the general contractor, FCL Builders, Inc. (FCL), alleging negligence pursuant to Section 414 of the Restatement (Second) of Torts (1965) (Section 414). Sullivan was not a party to the litigation. After hearing evidence, the jury found the plaintiff 20% at fault, FCL 40% at fault, and Sullivan 40% at fault. The trial court denied FCL’s motion for a directed verdict, finding sufficient evidence for the jury to find that FCL owed a duty under Section 414. The trial court also denied FCL’s motion for a new trial. Initially, the Illinois Appellate Court First District found sufficient evidence that FCL was both vicariously and directly liable for the safety of the plaintiff under Section 414. FCL had the right to control the safety of the project. FCL also stopped Sullivan’s employees from using ATVs on the roof to move material because the ATVs were damaging the roof. The appellate court found that, by stopping the work, and forbidding Sullivan from performing the work in a specific manner, FCL controlled the operative details of Sullivan’s work. The court found that FCL’s involvement meant that Sullivan was not entirely free to perform its work in its own way. Thus, under Section 414, the court held that a jury could find FCL liable for the plaintiff’s injuries. Significantly for defense practitioners, the Ramirez court also found that Illinois Pattern Jury Instruction number 55.01 (IPI 55.01) is not an accurate statement of Illinois law. IPI 55.01 instructs the jury that a general contractor can be held liable if it “retains some control over the safety of the work.” As the appellate court pointed out, Section 414 requires a general contractor to have more than “some control” in order to impose liability. Despite finding that the trial court erred in giving the jury this instruction, the appellate court held that FCL was not entitled to a new trial because the error did not severely prejudice the defendant. The appellate court also found that the trial court erred in including the plaintiff’s employer, Sullivan, on the jury verdict form. The court looked to Ready v. United/Goedecke Services, Inc., 232 Ill. 2d 24 | IDC 2014 SURVEY OF LAW
369 (2008), where the Illinois Supreme Court held that defendants who had settled with the plaintiff prior to trial were not to be included on the jury verdict form. The Ready decision reasoned that, because settling defendants could not be included in the apportionment of joint and several liability under 735 ILCS 5/2-1117, such defendants should not be included on the jury verdict form. Applying this reasoning, the First District held that, because the plaintiff’s employer is specifically excluded from the apportionment of joint and several liability under 735 ILCS 5/2-1117, the employer should have not have been included on the verdict form. Despite finding the inclusion of Sullivan on the verdict form to be in error, the First District found that the defendant was not prejudiced by the error and refused to grant FCL a new trial. Ramirez v. FCL Builders, Inc., 2014 IL App (1st) 123663.
Six Flags Not Liable under Section 414 because Its Personnel’s Involvement Was Limited to Monitoring Progress In Lee v. Six Flags Theme Parks, Inc., Campanella & Sons (Campanella) was hired by Six Flags Theme Parks, Inc. (Six Flags) to remove structural steel from a theme park ride at the park it owned. A heavy equipment mechanic employed by Campanella fell to his death while dismantling the steel. The mechanic’s estate filed suit against Six Flags, alleging negligence pursuant to Section 414 of the Restatement (Second) of Torts (1965) (Section 414). After a detailed analysis, the Illinois Appellate Court First District held that Six Flags could not be liable under Section 414. The appellate court examined whether Six Flags could be liable under both the retained control and the direct control theories of Section 414. In assessing retained control under Section 414, the court outlined three types of control: contractual control, supervisory control, and operational control. Initially, the appellate court stated: “The best indicator of whether the employer has retained control over the independent contractor’s work is the parties’ contract.” The contract between Six Flags and Campanella stated that Campanella was solely responsible for the means, methods, techniques, procedures, and coordination of the work. Additionally, the contract specified that Campanella was responsible for providing all labor, materials,
equipment, facilities, and services necessary for the completion of the work. Six Flags promulgated safety guidelines, requiring contractors working above six feet to provide fall protection to their employees. The court noted, however, requiring OSHA compliance does not create a duty of care. Therefore, the court found these guidelines to be insufficient to show retained control. Thus, there was insufficient evidence of contractual control to impose a duty of care on Six Flags under Section 414. The court also found insufficient evidence that Six Flags had supervisory control. Supervisory control is pervasive monitoring of the manner in which the work is done. Importantly, jobsite visits for the purpose of monitoring progress are not enough to rise to the level of retained control. The court noted that Six Flags did not require Campanella to submit daily reports or to attend meetings held by Six Flags. Moreover, the presence of Six Flags on the jobsite was to monitor progress only. Therefore, the appellate court found that the actions of Six Flags did not amount to retained supervisory control under Section 414. Similarly, the court found that Six Flags did not retain operational control over the contractor’s work. Campanella supervised the work of its own employees and provided its employees with safety equipment. In short, the Campanella employees were free to perform the work in their own way. The court also looked at whether Six Flags could be held directly liable under Section 414. It found that Six Flags did not superintend the entire job, even though it required Campanella to submit a safety plan and to comply with the park’s safety requirements. The safety requirements established by Six Flags were not significantly different from Campanella’s. Six Flags also did not superintend the entire jobsite, even though it maintained a daily, or at least weekly, presence on the jobsite. The evidence showed that the Six Flags employees on the jobsite merely monitored progress. Moreover, although Six Flags had authority to stop Campanella’s work, Six Flags never exercised this authority. Therefore, the court found that Six Flags could not have been directly liable under Section 414. Finally, the plaintiff presented no evidence that Six Flags had notice of the hazardous condition. There was no evidence that Six Flags actually knew that the platform on which the mechanic was standing would be removed or knew that the mechanic would not use his fall protection. Moreover, no Six Flags employees were present at the time of the occurrence. After engaging in this thorough and detailed analysis, the appellate court concluded that Six Flags could not be held liable under Section 414. Lee v. Six Flags Theme Parks, Inc., 2014 IL App (1st) 130771.
General Contractor Did Not Retain Sufficient Control Over Subcontractor’s Work to Trigger Liability under Section 414 In Fonseca v. Clark Construction Group, LLC, the plaintiff, an employee of drywall subcontractor RG Construction, tripped and fell while carrying a large sheet of drywall that weighed approximately 100 pounds. The plaintiff tripped over a piece of electrical pipe debris on the floor of the hallway. The drywall broke into two pieces, and one piece fell on top of the plaintiff, causing neck and back injuries. The plaintiff sued Maron Electric Co. (Maron), the electrical subcontractor and Clark Construction Group, LLC (Clark), the general contractor. The plaintiff alleged that Maron failed to remove its construction debris from the area where the plaintiff was working, causing him to fall. Plaintiff alleged that Clark’s contract with the owner made Clark solely responsible for the means and methods of the construction of the building. Clark’s contract with the owner also stated that Clark was primarily responsible for initiating, maintaining and supervising all safety precautions on the project. The subcontract between Maron and Clark stated that Maron was responsible and liable for all work, supervision, labor, and materials for its own work. The subcontract also made Maron responsible for cleaning up and removing all debris resulting from its work. Clark provided a safety manual to Maron, which was incorporated into the subcontract. The safety manual stated that Clark would chair monthly safety meetings and weekly toolbox talks, which Maron’s foreman was required to attend. Supervisory employees of Maron testified at their depositions that Maron was responsible for housekeeping and that Maron enforced and performed housekeeping duties daily. Clark was granted summary judgment by the trial court. Circuit Judge Kathy Flanagan held that Clark did not owe the plaintiff a duty under Section 414 of the Restatement (Second) of Torts (1965) (Section 414), because Clark did not control the means and methods or operative details of Maron’s work and “Clark Construction retained nothing more than the general rights attributable to general contractors.” Further, the trial court reasoned that “the existence of a safety program, safety manual, or safety director does not constitute retained control per se.” The appellate court focused on the amount of control Clark exercised over Maron. The court stated that, even if a general contractor retains the right to inspect work, issue change orders to the plans, and ensure that the work is done safely, the general contractor will not be held liable unless the evidence shows that the general contractor retained control over the incidental aspects of the independent contractor’s work. — Continued on next page
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Survey of 2014 Construction Law Cases (Continued) The appellate court held that Clark did not maintain significant control over Maron’s work. Specifically, the court said that, just because Clark provided a safety manual, had a safety manager, and inspected Maron’s work, there was insufficient control for Section 414 liability to apply. Furthermore, the appellate court noted that Maron retained control of clean-up and held its own safety meetings. Ultimately, the appellate court held that Clark did not owe the plaintiff a duty to exercise reasonable care. Fonseca v. Clark Constr. Grp., LLC, 2014 IL App (1st) 130308.
General Contractor Exercised Sufficient Control Over Subcontractor to be Liable for the Plaintiff’s Injuries and Knew or Should Have Known of Dangerous Conditions that Caused Them In Lederer v. Executive Construction, Inc., the plaintiff was employed by a subcontractor as a drywall taper for the construction of office space in an existing building. The plaintiff, while using stilts to reach the ceiling, fell after tripping over exposed and unguarded electrical conduit or pipe that protruded from the floor. He brought a personal injury action against the general contractor, Executive Construction, Inc. (Executive), and one of the subcontractors, Midwest Interstate Electrical Construction Co. (Midwest). The plaintiff’s claims against Executive were based on allegations that Executive failed to provide him with a safe work environment and, further, that Executive failed to follow job safety rule rules. Executive moved for summary judgment under Section 414 of the Restatement (Second) of Torts (1965) (Section 414) and argued that it was not liable for the plaintiff’s injuries because it did not retain sufficient control over the plaintiff’s methods of work or operative details to impose such a duty. Executive further argued that it had no knowledge of the alleged unsafe work conditions that caused the plaintiff’s injuries. The circuit court agreed with Executive and found that Executive did not owe a duty of care to the plaintiff. Consequently, Executive was not vicariously liable or directly liable under Section 414. The plaintiff appealed. The Illinois Appellate Court First District reversed the grant of summary judgment and found sufficient evidence that Executive did much more than supervise the plaintiff’s work. The appellate court found undisputed evidence that: (a) there were contractual obligations that Executive had with its subcontractors that required the subcontractors to perform work in accordance with Executive’s safety program; (b) Executive was required to have a project superintendent that enforced the safety program; (c) Executive had a safety manual that prohibited the use of stilts by Executive or subcontrac-
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tor employees; (d) Executive had the authority to stop unsafe work methods; and (e) Executive’s employees had the authority to cover unguarded conduits. Because Executive had so much supervisory control over its subcontractors, the court found that it could be held liable under Section 414. The appellate court also found sufficient evidence that Executive knew or should have known of the alleged unsafe work conditions. Deposition testimony of workers at the jobsite showed that the alleged conditions existed for more than an hour, there was congestion and lack of lighting that contributed to the accident, and the conduit was unguarded during the morning of the plaintiff’s accident. Lederer v. Exec. Constr., Inc., 2014 IL App (1st) 123170.
About the Authors Kathryn I. Beck is an associate attorney in the Civil Litigation Department of Brady, Connolly & Masuda, P.C. Her practice focuses on the areas of construction law, premises liability, products liability, and insurance coverage issues. Ms. Beck received her J.D. from Chicago-Kent College of Law and her undergraduate degree from the University of Michigan with a B.A. in English and Honors Psychology. Ms. Beck is a member of the Illinois Association of Defense Trial Counsel’s Construction Law and Insurance Law Committees. Mark McClenathan, Heyl, Royster, Voelker & Allen, P.C. Mr. McClenathan has handled commercial and civil litigation in state courts in more than 19 counties in northern Illinois and in the Northern District of Illinois federal court. He has also represented municipalities and individual clients before various governmental bodies. Prior to joining Heyl Royster, he worked for the legal department of the Defense Logistics Agency (Defense Contract Services) of the Department of Defense in Chicago, and the legal departments of Land O’Lakes, Inc. and 3M Corporation. Cecil E. Porter, III of Litchfield Cavo LLP focuses his practice in the areas of construction litigation, toxic tort litigation, commercial litigation, employers’ liability, contractual disputes, auto liability, premises liability, and workers’ compensation. He has served as first and second chair of jury trials to verdict in private practice and while serving as a prosecutor. He has also served as first chair of many bench trials, arbitration hearings, and workers’ compensation appeals. Mr. Porter was listed as one of Illinois Super Lawyers Rising Stars, a select designation only given to 2.5 percent of the total lawyers in Illinois, in 2011, 2012, 2013, and 2014. Robert J. Winston, partner at Brady, Connolly & Masuda, P.C. in Chicago has handled civil litigation matters for nearly 30 years. Mr. Winston concentrates his practice in the areas of construction law, insurance coverage, premises liability, products liability, and municipal law. A graduate of Ohio State University College of Law, Mr. Winston is admitted in the United States Court of Appeals for the Seventh Circuit; United States District Court, Northern District of Illinois; Illinois Supreme Court; United States District Court, Eastern District of Ohio; and the Ohio Supreme Court.
CONSTRUCTION law committee MEMBERS
Stephen Ayres Heyl, Royster, Voelker & Allen, P.C.
Patricia J. Hogan, Chair
Kathryn I. Beck Brady, Connolly & Masuda, P.C.
Cassiday Schade LLP, Chicago
Lindsay Brown Cassiday Schade, LLP
312-444-1665
[email protected]
Molly P. Connors Brady, Connolly & Masuda, P.C.
David R. Ganfield
Mark McClenathan, Vice Chair Heyl, Royster, Voelker & Allen, P.C., Rockford
Bill Busse Busse, Busse & Grassé, P.C.
Jason Johnson HeplerBroom LLC Michael Kokal Heyl, Royster, Voelker & Allen, P.C. Cecil E. Porter, III Litchfield Cavo LLP Leah E. Selinger Purcell & Wardrope Chartered
815-963-4454
[email protected]
W. Scott Trench Brady, Connolly & Masuda, P.C.
Robert J. Winston Brady, Connolly & Masuda, P.C.
Matthew Sims Cassiday Schade LLP
IDC 2014 SURVEY OF LAW | 27
Survey of
Employment Law Cases
Illinois Supreme Court Clarifies Elements of Retaliatory Discharge Claims In Michael v. Precision Alliance Group, the Illinois Supreme Court clarified the elements of a state law retaliatory discharge claim and the standard of proof applicable to both plaintiffs and defendants. Michael involved three plaintiffs who were employees of the defendant Precision Alliance Group that, among other things, packages and distributes soybean seeds for commercial use. While employed, the plaintiffs provided information to a former employee to use to report the company anonymously to state authorities for illegally selling underweight seed bags. The defendant tried to discover the whistleblower’s identity, and each plaintiff overheard threats of termination if the defendant learned who made the report. About a month after an investigation substantiated the claim, one plaintiff was terminated for “horseplay” and the other two were among four employees laid off in a reduction in force (for reasons such as not being a hard worker, having a narrow skill set, poor attitude, and being a “ring leader”). The managers making each termination decision claimed to not be aware of the plaintiffs’ roles in reporting the misconduct. After hearing the evidence, the circuit court entered judgment in favor of the defendant by applying the three-part McDonnell Douglas burden shifting analysis established in federal cases and used by the Illinois Appellate Court First District in Maye v. Human Rights Commission, 224 Ill. App. 3d 353, 360 (1991). Under this test, a plaintiff must first establish a prima facie case of retaliation by a preponderance of the evidence that the defendant committed an adverse act against him and that a “causal nexus” existed between the protected activity and adverse act. The defendant may then rebut the presumption of unlawful discharge by articulating a legitimate, non-discriminatory reason for the discharge. The burden then shifts back to the plaintiff to prove that the proffered reason is pretextual. The circuit court concluded that the plaintiffs established a prima facie case because the reporting of underweight bags was a protected activity and there was a “causal nexus” due to the short time between the reporting and terminations. The circuit court, however, found that the defendant’s articulated reasons for the termination were legitimate and non-discriminatory and that the plaintiffs failed to prove that those reasons were pretextual. Therefore, the circuit court entered judgment in favor of the defendant.
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The appellate court reversed, concluding that the circuit court’s finding of a “causal nexus” meant that the circuit court had determined that the plaintiffs proved causation for their retaliatory discharge claim and that they had, in fact, been discharged for a protected activity. The appellate court found that the circuit court increased the plaintiffs’ burden by requiring them to prove, in addition to causation, that the defendant’s articulated reasons for the terminations were, in fact, pretextual. Accordingly, the plaintiffs not only had to prove their case, but also had to disprove the defendant’s defense, thereby enhancing their burden of proof. The appellate court, therefore, found that the case should be remanded on the issue of the plaintiffs’ damages only because of the circuit court’s finding of a “causal nexus.” The Illinois Supreme Court’s analysis reiterated that Illinois is an at-will employment state and that retaliatory discharge actions are allowed only in two narrow situations: for filing/threatening a workers compensation claim or for reporting illegal or improper conduct (whistle blowing). The court stated that, to sustain a cause of action for retaliatory discharge, the employee must prove: 1) the employer discharged the employee; 2) the discharge was in retaliation for the employee’s activities (causation); and 3) the discharge violates a clear mandate of public policy. In such cases, the employer is not required to explain the employee’s discharge, but if it chooses to do so with a legitimate and non-pretextual reason, and the trier of fact believes it, the causation element is not met. The supreme court found that the appellate court improperly relieved the plaintiffs of their burden to establish their case. Additionally, the court found that, although the circuit court reached the correct conclusion (no liability), it used the wrong test for arriving at that conclusion. The court pointed out that it had rejected the McDonnell-Douglas burden shifting test in Clemons v. Mechanical Devices Co., 184 Ill. 2d 328 (1998), even though the appellate court later used it in Maye. The appellate court also confused the concept of “causal nexus” with “causation.” A “causal nexus” simply acknowledges the short time period between events, which is insufficient to fulfill the burden of proving “causation.” The court held that, because the employer chose to come forward with valid, non-pretextual reasons for discharging the plaintiffs and the trier of fact believed them, the causation element required for the retaliatory discharge claim was not met. Michael v. Precision Alliance Grp., LLC, 2014 IL 117376.
Public Employee Receives First Amendment Protection Lane v. Franks involved the firing of Edward Lane. Lane was hired as Director of Community Intensive Training for Youth (CITY) at a community college. He conducted an audit and discovered that Suzanne Schmitz, an Alabama State Representative who was on the payroll for CITY, had not been reporting to work. A grand jury indicted Schmitz. Under subpoena, Lane testified at the trial and the retrial regarding the events that led to his termination of Schmitz. Schmitz was convicted on three counts of mail fraud and four counts of theft from a program receiving federal funds. Steve Franks, the community college’s president, later fired Lane. Lane sued Franks in his individual and official capacities under Rev. Stat. § 1979, 42 U.S.C. § 1983, alleging that Franks had violated the First Amendment by firing him in retaliation for his testimony against Schmitz. The U.S. District Court for the Northern District of Alabama granted Franks’s motion for summary judgment. The U.S. Court of Appeals for the Eleventh Circuit affirmed. The Supreme Court granted certiorari to resolve discord among the courts of appeals as to whether public employees may be fired (or suffer other adverse employment consequences) for providing truthful subpoenaed testimony outside the course of their ordinary job responsibilities. The Court explained that the First Amendment protection of a public employee’s speech depends on the careful balance between the employee’s interests in commenting, as a citizen, upon matters of public concern and the interests of the State in promoting the efficiency of the public services it performs, as an employer, through its employees. The Court found that Lane’s testimony was speech of a citizen. Sworn testimony in court is citizen speech because of the obligation to the court and to society at large to tell the truth. The Court also found that Lane’s testimony involving misuse of state funds was a matter of public concern. The Court then looked to see whether the government had “an adequate justification for treating the employee differently from any member of the public” based on the government’s needs as an employer. No justification was found. Thus, the Court ruled that Lane’s speech was entitled to protection under the First Amendment. The Court also addressed whether the claims against Franks, in his individual capacity, should be dismissed on the basis of qualified immunity. Under this doctrine, courts may not award damages against a government official in his personal capacity unless the statutory or constitutional right that the official violated was “clearly established” when the challenged conduct occurred. The Court found that, based upon a prior case, Franks, at the time he fired Lane, could have reasonably believed that a governmental employer could fire an employee on account of testimony the
employee gave, under oath, and outside the scope of his ordinary job responsibilities. While addressing the rights of public employees who are subpoenaed to testify in court, the case does not specifically address whether a public employee speaks “as a citizen” when he testifies in the course of his ordinary job responsibilities. The concurring opinion mentioned police officers, crime scene technicians, and laboratory analysts as individuals who testify on a routine basis and whose testimony is a critical part of their employment duties. The concurring justices noted that the Court properly left the constitutional questions raised by these scenarios for another day. Lane v. Franks, 134 S. Ct. 2369 (2014).
U.S. Supreme Court Rules Closely-Held For-Profit Corporations Are “Persons” Under the RFRA and Can Refuse, on Religious Grounds, to Pay for Legally Mandated Contraceptives The Patient Protection and Affordable Care Act of 2010 (ACA), 42 U.S.C. § 300gg–13(a)(4), mandated that employer group health care plans provide women employee’s “preventive care and screenings” without “any cost sharing requirements.” The ACA did not specify what types of preventative care must be covered, but the Department of Health and Human Services (HHS) issued regulations. Pursuant to the regulations, non-exempt employers generally are required to provide coverage for the 20 contraceptive methods approved by the U.S. Food and Drug Administration, including the four that may have the effect of preventing an already fertilized egg from developing any further. In Burwell v. Hobby Lobby, two religious families who own three closely held corporations (Hobby Lobby, Mardel, and Conestoga Wood Specialties) challenged this mandate, as to the four post-fertilization contraceptive methods only, under the Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. § 2000bb, et seq., and the Free Exercise Clause of the First Amendment, U.S. Const. amend. I. The corporations all adhered to the Christian beliefs of their respective owners and, as such, argued that these four contraceptive methods violated their religions. The U.S. Supreme Court ruled in favor of the corporations and held that for-profit corporations are “persons” under the RFRA. The Court made it clear that the RFRA’s text was designed for broad and expansive religious liberties. The majority dismissed HHS’s argument that there is a fundamental difference between nonprofit and for-profit organizations that warrants exemptions for nonprofits. The — Continued on next page
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Survey of 2014 Employment Law Cases (Continued) Court extended the RFRA to protect the rights of the individuals behind for-profit corporations because there is no articulated distinction between nonprofit and for-profit corporations under the RFRA. The Court discussed the Dictionary Act’s definition of “person,” which includes “corporations.” 1 U.S.C. § 1. The Court explained that no conceivable definition of “person” that includes natural persons and nonprofit corporations would exclude for-profit corporations.
The Court recognized that this case poses an important philosophical question based in religion and moral values, in particular the circumstances under which it is immoral for a person to perform an innocent act that has the effect of enabling or facilitating another to commit an immoral act.
The Court further ruled that the contraceptive mandate placed a substantial burden on the free exercise of religion of those corporations and did not satisfy the “least restrictive means” requirement. HHS and the dissent contended that the connection was too far removed from the owners because the women chose their coverage plans and whether or not to use the debated contraceptive methods. The Court recognized that this case poses an important philosophical question based in religion and moral values, in particular the circumstances under which it is immoral for a person to perform an innocent act that has the effect of enabling or facilitating another to commit an immoral act. Ultimately, the Court decided that it is not the judge of the reasonableness of an individual’s belief, but rather whether that belief is sincere. The Court concluded that corporations would face substantial economic penalties for failing to provide the required coverage, which in essence would penalize them for exercising their religious beliefs. In finding that a substantial burden exists on the corporations, the Court determined there were less restrictive means in achieving the goal of the ACA. Accommodations have been in place for exempt nonprofits that could be put in place for for-profit corporations as well. The Court reasoned that women still could obtain coverage for the four contraceptives through the government, thus indicating another acceptable accommodation. The dissent argued that this decision would allow for-profit entities to seek exemptions from regulations they deem offensive 30 | IDC 2014 SURVEY OF LAW
to their faith. The Court clarified that the sincerity of a corporation’s beliefs is an analysis appropriately reserved for the Court and that state law and relevant corporate structures will provide a check for exploitations. The Court also reiterated that the ruling does not apply to all mandates, but is tailored to the contraceptive mandate. Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014).
Pricing and Bid Information Are Not Trade Secrets and Non-Solicitation Agreement Does Not Apply to Clerical Employees In Xylem Dewatering Solutions, Inc. v. Szablewski, the plaintiff pumping company sued former outside sales persons pursuant to a non-solicitation agreement. Despite a company policy that required all employees to sign a non-compete agreement, these former employees had not signed the non-compete agreements and only one had signed the non-solicitation agreement. The plaintiff sought a preliminary injunction to prevent the former employees from continuing operation of a competing pumping company. The nonsolicitation agreement prohibited the solicitation of any nonclerical employee for a period of one year following the termination of employment. The provision did not apply to any former employee who responded to a public advertisement. The competing company had hired seven of the plaintiff’s former employees. The plaintiff also argued that the former employees had retained confidential pricing information in violation of the Illinois Trade Secrets Act, 765 ILCS 1065/1, et. seq. The Illinois Appellate Court Fifth District affirmed the trial court’s denial of a preliminary injunction, citing well-established injunction and trade secrets rules. The court concluded that the plaintiff employer had not met its burden of establishing (1) a clearly ascertained right in need of protection; (2) irreparable injury; (3) no adequate remedy at law; and (4) a likelihood of success on the merits. With regard to the non-solicitation agreement, the court determined that the agreement had not been violated. The court concluded that the evidence showed that the newly hired former employees were either clerical or responded to the general advertisement. The court specifically determined that categorizing an inside salesperson’s work as “clerical” was appropriate, in light of the long-standing principle that restrictive covenants must be strictly construed. This conclusion was based on the salesperson’s testimony that his work involved sending out quotes and taking product orders over the phone. Pricing information was derived from the computer, the company’s pricing guides, or supplier price books.
In reviewing the trade secrets claim, the court concluded that the plaintiff employer had failed to establish a protectable interest in the pricing and bid information. Information generally known or understood within an industry does not qualify as a trade secret. The court concluded that the pricing and bid information did not rise to the level of trade secrets, based on testimony that pricing guides were sometimes given to customers and that customers shared bids with competitors.
the board member’s accusations were sincere, and thus it did not matter if the board members were wrong in their assessment of her job performance. Similarly, the court held that simply because some of the criticisms leveled against Harper might not be completely fair did not establish that they are pretextual.
Xylem Dewatering Solutions, Inc. v. Szablewski, 2014 IL App (5th) 140080-U (2014).
Plaintiff Cannot Collect Lost Wages in Workers’ Compensation Retaliation Claim
Seventh Circuit Finds that Unfair or Mistaken Views of County Treasurer’s Work Performance Do Not Establish Sex Discrimination Based on Unequal Pay Affirming summary judgment in favor of Fulton County, Illinois, the U.S. Court of Appeals for the Seventh Circuit rejected a claim by the County Treasurer that her lower salary than the male County Clerk was due to sex discrimination by certain members of the County Board. In Harper v. Fulton County, Illinois, Victoria Harper, the County Treasurer since 1994, claimed that the Fulton County Board violated her Fourteenth Amendment equal protection rights under the U.S. Constitution by passing a salary ordinance freezing her salary for her 2010–2014 term of office while granting salary increases to the male County Clerk during that same time frame. Harper supported her claim under the direct method of proof with statements of a female former County Board member as well as the female Circuit Clerk stating their personal beliefs that male board members were biased against women and against them in particular. Rejecting this evidence, the Seventh Circuit found that none of the testimony was direct evidence that the board denied Harper pay raises because of her sex, and the testimony was not strong enough circumstantial evidence of intentional discrimination either because the testimony was conclusory, speculative, and not directly related to their sex or to the conclusion that the County Board was illegally motived to discriminate against Harper because of her sex without reliance on speculation. The court also rejected Harper’s claim under the indirect method of proof. Focusing on whether the County Board’s justifications for its salary ordinances were pretextual, the court found that Harper completely failed to produce evidence tending to prove that the county’s numerous justifications for denying her pay raises are pretexts for masking sex discrimination. It was not enough for Harper to show that the board members were mistaken about the accusations leveled against her. The relevant inquiry was whether
Harper v. Fulton County, Ill., 748 F.3d 761 (7th Cir. 2014).
In Dale v. South Central Illinois Mass Transit District, the Illinois Appellate Court Fifth District found that the exclusive remedy provision of the Illinois Workers’ Compensation Act (the Act), 820 ILCS 305/5(a) (West 2010), barred an employee injured on the job from collecting damages for lost wages in a retaliatory discharge claim, even when the employer’s delay in approving treatment caused the employee’s inability to work. The plaintiff, Richard Dale, was a former employee of the defendant who injured his shoulder while working. A doctor recommended that the plaintiff undergo surgery for his injuries, but the plaintiff alleged that the surgery was delayed because the defendant improperly denied his workers’ compensation claim. After a 12-week leave of absence under the Family Medical Leave Act, 29 U.S.C. § 2601, et seq. (2006), the defendant terminated the plaintiff’s employment because he was medically unable to work. The plaintiff filed a retaliatory discharge claim under the Act, which included a request for damages for lost wages. The defendant filed a motion for summary judgment on the lost wages claim, arguing that the plaintiff’s lost wages were caused by his injury, not by wrongful termination; the claim was barred under the Act’s exclusive remedy provision; and the claim was barred by res judicata because the plaintiff’s workers’ compensation claim was settled already. The circuit court granted the defendant’s motion, finding that the plaintiff’s lost wages were caused by his injury. Subsequently, the lower court certified two questions of law: “I. Whether an employee who was injured on the job and who is unable to return to work as a result of a workers’ compensation carrier’s delay in approving medical treatment can recover lost wages in a subsequently filed retaliatory discharge claim or whether damages for such lost wages fall within the exclusivity provision of the Illinois Workers’ Compensation Act. — Continued on next page
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Survey of 2014 Employment Law Cases (Continued) II. Whether an employer who terminates an employee who is physically unable to perform the functions of his job after sustaining an on-the-job injury is liable for lost wages in a subsequently filed retaliatory discharge action when the employee’s physical inability to perform the functions of his job was caused by the employer’s worker’s compensation carrier’s delay in approving medical treatment for the on-the-job injury or whether such damages fall within the exclusivity provision of the Illinois Workers’ Compensation Act.” The Fifth District answered both questions by finding that the Act’s exclusive remedy provision bars a claim for lost wages made by an employee who is unable to work due to his employer’s delay in authorizing treatment for work-related injuries. Under the exclusive remedy provision, employees covered by the Act cannot bring common law actions against their employers. The court analyzed the four exceptions to the exclusive remedy provision, whereby the injury could not (1) be accidental, (2) arise from the employee’s employment, (3) be received during the course of employment, or (4) be compensable under the Act. The court found that the first exception did not apply because the certified questions did not establish that the employer specifically intended to injure the employee by delaying approval of his treatment. Regarding the second and third exceptions, the court noted that the certified questions expressly stated that the injury was work-related. Finally, the court stated that lost wages are clearly compensable under the Act, so the fourth exception did not apply. Further, the Fifth District found that the employer’s delay in approving treatment does not break the causal connection between the workplace accident and the injury. Therefore, the court concluded, the lost wage claim under those circumstances would stem from the injury, not from the retaliatory discharge. Dale v. S. Cent. Ill. Mass Transit Dist., 2014 IL App (5th) 130361.
Amendments to Illinois Human Rights Act Codifying Pregnancy Discrimination to Take Effect this Year On August 25, 2014, Governor Pat Quinn signed into law new pregnancy discrimination and accommodation amendments, known as the Pregnancy Fairness Act, which will afford expectant mothers specific workplace protections during their pregnancies and after childbirth. Affirmatively adding pregnancy as a protected characteristic under the Illinois Human Rights Act (IHRA), the amendments define pregnancy to include “pregnancy, child-
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An employer may not force an employee to accept an accommodation that she did not request or to which she did not agree; nor may it force the employee to take leave if another reasonable accommodation can be provided. An employer may only refuse a reasonable accommodation upon a demonstration of “undue hardship” on the ordinary operation of its business.
birth, or medical or common conditions related to pregnancy or childbirth.” 775 ILCS 5/1-103(L-5). The law, which took effect on January 1, 2015, goes beyond the EEOC Guidance issued in 2014 by codifying an employer’s legal obligation to provide reasonable accommodations to pregnant applicants and employees if requested. EEOC, Enforcement Guidance: Pregnancy Discrimination and Related Issues (July 14, 2014), available at http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm. These amendments apply to all Illinois employers and virtually all employees, whether full time, part-time, or probationary. The amendments impose an affirmative legal obligation to accommodate pregnancy and childbirth-related conditions. As with disability accommodation, an employer may request documentation from the employee’s health care provider concerning the need for the requested reasonable accommodation or accommodations. 775 ILCS 5/2-102(J)(1). Specific accommodations include the following: “[M]ore frequent or longer bathroom breaks, breaks for increased water intake and breaks for periodic rest; private non-bathroom space for expressing breast milk and breastfeeding; seating; assistance with manual labor; light duty; temporary transfer to a less strenuous or hazardous position; the provision of an accessible worksite; acquisition or modification of equipment; job restructuring; a part-time or modified work schedule; appropriate adjustment or modifications of examinations, training materials, or policies; reassignment to a vacant position; time off to recover from conditions related to childbirth; and leave necessitated by pregnancy, childbirth, or medical or common conditions resulting from pregnancy or childbirth. Id. § 2-102(J)(4). An employer, however, is not required to create additional employment opportunities for women affected by pregnancy or
childbirth conditions, to discharge or to transfer another employee, or to promote an unqualified employee unless the employer does so for other employees who request accommodations. Id. An employer may not force an employee to accept an accommodation that she did not request or to which she did not agree; nor may it force the employee to take leave if another reasonable accommodation can be provided. Id. § 2-102(J)(3). An employer may only refuse a reasonable accommodation upon a demonstration of “undue hardship” on the ordinary operation of its business. The factors to be considered in evaluating whether an accommodation poses an “undue hardship” include the following: the nature and cost of the accommodation; the overall financial resources of, the number of persons employed at, the effect on expenses and resources of, and other impacts on the operations of the facility involved; the overall financial resources, the overall number of employees, and the number, type, and location of the facilities of the employer involved; and the type of operations of the employer and relationship of the facility involved to the overall operations of the employer. Id. Unless a showing of undue hardship is made, an employee who has been affected by pregnancy, childbirth, or medical conditions related to pregnancy must be reinstated to her original job or to an equivalent position with equivalent pay and accumulated seniority, retirement, fringe benefits, and other applicable service credits upon her return or when her need for reasonable accommodation ends. Id. § 2-102 (J)(4). Employers are mandated to post a notice of employee rights that is available from the Illinois Department of Human Rights. Id. § 2-102(K). Pregnancy Fairness Act, Pub. Act 98-1050 (codified in scattered sections of 775 Ill. Comp. Stat. ch. 5).
Illinois “Bans the Box” in Hiring Starting in 2015 The Illinois legislature joined the growing trend to “ban the box” or prohibit employers from having the “box” that is commonly found on employment applications asking whether the applicant has ever been convicted of a crime. The Job Opportunities for Qualified Applicants Act went into effect on January 1, 2015, and applies to employers with 15 or more employees in the current or preceding calendar year, as well as to employment agencies. It provides that employers and employment agencies cannot “inquire about or into, consider, or require disclosure of the criminal record or criminal history of an applicant until the applicant has been determined qualified for the position and notified that the applicant has been selected for an
interview by the employer or employment agency.” If the employer or employment agency does not plan on interviewing a candidate, then it cannot inquire into a candidate’s criminal history until after giving the candidate a conditional offer of employment. Exceptions are allowed in limited circumstances. The new law does not apply to employers who are required by federal or state law to exclude applicants with certain criminal convictions. For positions that require a standard fidelity or an equivalent bond and where conviction of certain criminal offenses would disqualify a candidate from obtaining the bond, employers are permitted to ask the narrower question of whether the candidate has been convicted of those specific disqualifying criminal offenses. An exception is also made for employers who employ individuals licensed under the Emergency Medical Services (EMS) Systems Act. Lastly, an employer may specify in writing what specific offenses would disqualify an applicant from employment in a particular position due to federal or state law or the employer’s policy. Violations of the law may result in civil penalties administered by the Illinois Department of Labor, including progressive penalties that could include notice, warnings, and potential monetary fines. Job Opportunities for Qualified Applicants Act, Pub. Act 98-774 (codified at 820 ILCS 75/1 to 99).
U.S. Supreme Court Provides Additional Guidance Regarding when Employees Must be Compensated for Changing Articles of Dress and When that Time May be Subject to Collective Bargaining In Sandifer v. United States Steel Corp., the U.S. Supreme Court upheld as valid a provision of a collective bargaining agreement that provided that time spent donning and doffing certain items of protective gear was not mandatorily compensable. The employees alleged that the protective gear was required due to hazards associated with working at a steel plant, and included a flame-retardant jacket, a pair of pants and hood, a hardhat, a snood (a hood that covers the neck and upper shoulders), wristlets, work gloves, leggings, boots, safety glasses, earplugs, and a respirator. At issue in the case was the application of certain provisions of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. §§ 206(a), 207(a), 213, which governs minimum wages and maximum hours for certain employees who during any workweek are engaged in commerce or the production of commercial goods, or who are employed in a commercial enterprise or in an enterprise that produces goods for commerce. Because that Act does not define “work” or — Continued on next page
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Survey of 2014 Employment Law Cases (Continued) “workweek,” a prior Supreme Court opinion held that the statutory workweek includes all times when an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace, as well as time spent pursuing certain preliminary activities after arrival, such as donning aprons and overalls and doffing shirts. As a reaction to that ruling, the Portal-to-Portal Act of 1947, 29 U.S.C. § 254(a)(2), was enacted, which among other things excluded from compensable time any preliminarily or postliminary activities that occur either prior to the time on any particular workday when an employee commences, or after an employee ceases the principal activity or activities to which the excluded activities are preliminarily or postliminary. At the time the Sandifer case was brought before the Court, the U.S. Department of Labor—building from the legislation and case-law above—had advised that time spent washing or changing clothes should be excluded generally from hours worked each week, and that the compensability of that time is appropriately determined through collective bargaining. Therefore, absent a collective bargaining agreement on the issue, if preliminary or postliminary tasks (such as putting on safety gear) is “changing clothes” for purposes of the FLSA, then it is mandatorily compensable under the Act. If the task does constitute “changing clothes,” then it is not mandatorily compensable, but it can be bargained for. The Court in Sandifer was faced with a collective bargaining agreement that provided that time for donning and doffing “protective gear” was not compensable. Plaintiffs argued that the protective gear at issue did not constitute “clothing.” Therefore, they argued, the compensability of donning and doffing that gear could not be bargained for, and should be mandatorily compensable. Thus, the Court was called upon to determine whether the protective gear at issue was “clothes” for purposes of the FLSA. The Court adopted a definition of “clothes” as items that are both designed and used to cover the body, and are commonly regarded as articles of dress. As to the 12 items at issue, the Court determined that nine fit within that definition: jacket, pants, hood, gloves, hard-hat, snood, wristlets, leggings, and boots. Three items did not satisfy that standard: glasses, earplugs, and respirator. Because the first nine items constituted “clothing,” it was appropriate to bargain over the compensability of time spent putting on or removing those items. Therefore, the Court upheld as valid the provision of the collective bargaining agreement that provided that time spent donning and doffing those items was not mandatorily compensable. Sandifer v. U.S. Steel Corp., 134 S. Ct. 870 (2014).
U.S. Supreme Court Holds that Recess Appointments to the National Labor Relations Board Are Unconstitutional When the Recess Is Not of Substantial Length In National Labor Relations Board v. Noel Canning, a unanimous U.S. Supreme Court held that the Recess Appointments Clause of Article II of the U.S. Constitution (the “Clause”), Art. II, § 2, cl. 3, empowers the president of the United States to fill any existing vacancy during any recess of the Senate, so long as the recess is of sufficient length. The case arose from a challenge issued to President Barack Obama’s appointment of three members of the National Labor Relations Board during a brief, two-day Senate recess between pro forma Senate sessions, during which no business was transacted. The Court began its analysis by noting that the Clause gives the president the power to “fill up all Vacancies that may happen during the Recess of the Senate.” Art. II, § 2, cl. 3. The Court noted that the constitutional framers intended the norm for appointment of U.S. officers under Article II to require Senate approval of presidential nominations, at least for principal officers. The Clause, however, reflects the tension between the president’s continuous need for the “assistance of subordinates” and the Senate’s early practice of meeting for a brief session each year. Importantly, the Clause should be interpreted as granting the president the power to make appointments during a recess, but not offering the president the authority to routinely avoid the need for Senate confirmation. Also, the court noted that U.S. presidents have made recess appointments since the beginning of the republic, and the Court was hesitant to disturb that practice. Synthesizing the founding-era usage of the English language, the purpose of the Clause, and its historical usage, the Court determined that the Clause applies to both inter-session and intra-session recesses of substantial length. The Court, however, held that a threeday recess would be too short a time to trigger the Clause, noting that even the Solicitor General conceded that a three-day recess would be too short a time. In addition, the Constitution’s Adjournments Clause, Art. I, § 5, Cl. 4, reflects that a three-day break is not a significant interruption of legislative business. Reviewing the history of the Clause’s use, the Court concluded that a recess of more than three days but less than 10 days is presumptively too short to fall within the Clause. The Court also held that the Clause applies to vacancies that come into existence during the recess and those that come into existence prior to the recess. Finally, the Court, refusing to ignore pro forma sessions, held that the Senate is “in session” when it says that it is, provided that under the relevant rules it retains the capacity to transact Senate business. Nat’l Labor Relations Bd. v. Noel Canning, 134 S. Ct. 2550 (2014).
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Third District Finds Non-Compete Agreement Unenforceable Based on Finding of Lack of Adequate Consideration On January 7, 2012, Dr. Maria Francis, a licensed physician specializing in rheumatology, entered into a “Physician Agreement” with Prairie Rheumatology Associates, S.C. (“PRA”), with an effective date of April 9, 2012. The agreement required PRA to assist Dr. Francis in gaining staff privileges and to pay her hospital dues at two area hospitals where PRA provided rheumatology services. PRA also agreed to introduce Dr. Francis to PRA patients and referral sources, including physicians at the two hospitals. The agreement included a two-year, 14-mile noncompetition agreement in favor of PRA. The parties also agreed that PRA would consider Dr. Francis for the position of shareholder after 18 months. PRA filed a complaint for injunctive relief to enforce the restrictive covenant prohibiting Dr. Francis from practicing within a 14-mile radius of the office and the hospitals for two years after her termination of employment with PRA. The trial court determined that the restrictive covenant was ancillary to the main employment contract and was supported by adequate consideration. The trial court then concluded that the restrictive covenant was reasonable as to PRA’s current patients, but unreasonable as to PRA’s future patients and the public in general, based on the three-pronged reasonableness test discussed in Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, ¶ 17. The appellate court reversed the trial court’s order granting a preliminary injunction to enjoin Dr. Francis from treating PRA’s current patients and affirmed the portion of the trial court’s order denying the preliminary injunction. The court did not reach the parties’ arguments regarding the reasonableness of the covenant terms because it found that there was insufficient consideration to uphold the covenant not to compete. The Illinois Appellate Court Third District analyzed the validity of the covenant not to compete and determined that there was not adequate consideration to uphold the covenant. The court noted that the general two-year rule of thumb that supports adequate consideration was not met because Dr. Francis tendered her resignation 15 months after the start of her employment and officially left PRA after being employed for 19 months. The court analyzed PRA’s argument that Dr. Francis received additional consideration because PRA assisted her in obtaining hospital membership and staff privileges, provided access to previously unknown referral sources, and offered opportunities for expedited advancement within PRA. The appellate court concluded that the evidence at the preliminary injunction hearing revealed that, although PRA provided Dr. Francis with credentialing applications, it did not pay the entirety of her credential fee as promised in the employment contract. Additionally, the evidence revealed that PRA did not
introduce Dr. Francis to referral sources and did not implement any procedure to introduce her to the doctors on staff at the two hospitals. Moreover, the sole shareholder of PRA, Dr. Maria Sosenko, testified that she could not identify any doctor she introduced to Dr. Francis. The appellate court also concluded that the expedited advancement and partnership opportunities were at best illusory benefits because there was no guarantee that Dr. Francis would become a shareholder. The appellate court concluded that PRA failed to provide adequate consideration, so the restrictive covenant was unenforceable. Consequently, PRA was unable to show a likelihood of prevailing on the merits. As such, the appellate court reversed the portion of the trial court’s order granting the preliminary injunction to enjoin Dr. Francis from treating current patients of PRA. Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338.
NLRB Clamps Down on Employers’ Email Policies In Purple Communications, Inc. and Communications Workers of America, AFL-CIO, the National Labor Relations Board (NLRB) held that company policies that limit the use of the company’s email for only business-related purposes violate Section 7 of the National Labor Relations Act (NLRA), 29 U.S.C. § 157, because they unduly interfere with employees’ rights to communicate with one another regarding self-organization and other terms and conditions of employment. Purple Communications, Inc. had a policy that provided that company emails were for “business purposes only.” Its policy also prohibited employees from using company email to “engag[e] in activities on behalf of organizations or persons with no professional affiliation or business with the company” and to “send uninvited email of a personal nature.” The NLRB found that employee use of email for statutorily protected communications on non-working time must presumptively be permitted by employers who have chosen to give employees access to their email systems. This decision, recorded on December 11, 2014, specifically overturned a 2007 NLRB decision that had held that an employer could limit the use of its emails to business purposes no differently than the employer could limit the use of its other communications equipment (such as copy machines, bulletin boards, and telephones) to business purposes only. The decision found that an email is not “equipment” but rather is “fundamentally a forum for communication.” Thus, the NLRB determined that there is a presumption of the right to communicate in the workplace on nonworking time, whether verbally or through a company’s email system. — Continued on next page) IDC 2014 SURVEY OF LAW
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Survey of 2014 Employment Law Cases (Continued) The decision appears to be limited to employees who already have been granted access to the employer’s email system in the course of their work and does not require employers to provide such access. Although undefined, the NLRB also stated that an employer may attempt to justify a total ban on non-work use of email if it is able to demonstrate that “special circumstances” make the ban necessary to maintain production or discipline. Finally, even in the absence of “special circumstances,” the employer may apply uniform and consistently enforced controls over its email system to the extent such controls are necessary to maintain production and discipline.
About the Authors Denise Baker-Seal is a partner in the Belleville, Illinois law firm of Brown & James, P.C. Her practice has focused on the defense of employment matters and catastrophic personal injury cases. She serves as Co-Chair of the Firm’s Employment Law Group. Ms. Baker-Seal has experience representing clients in state and federal courts, the EEOC, and state and local administrative agencies. She also serves as an arbitrator in the mandatory arbitration programs in St. Clair and Madison Counties. Prior to entering private practice, Ms. Baker-Seal served as judicial law clerk to the Honorable Lewis M. Blanton, U.S. Magistrate Judge. A graduate of Millikin University and
Although the NLRB specified that the personal use of company email must be off work time, it ignored the fact that an email authored during non-working time can be read by its intended recipients during work time.
Northeastern University School of Law, Ms. Baker-Seal is admitted to the bars of Illinois and Missouri and all federal courts in Illinois. Julie A. Bruch is a partner with O’Halloran Kosoff Geitner & Cook, LLC. Her practice concentrates on the defense of governmental entities in civil rights and employment discrimination claims.
Molly P. Connors is an associate at Brady, Connolly & Masuda, P.C. She focuses her practice on the defense of construction, premises liability, employer liability, and insur-
Although the NLRB specified that the personal use of company email must be off work time, it ignored the fact that an email authored during non-working time can be read by its intended recipients during work time. Further, to enforce the policy would require the company to actively monitor employees’ use of its email system to know whether an email was drafted (or read) during working hours. Although not prohibited under this decision, such monitoring could lead to an employer being accused of unlawful surveillance of Section 7 activity. The NLRB’s decision only addresses policies that limit use of email “for business purposes only” (or similar wording), and does not address personal use of the employer’s email beyond Section 7 activity, such as online shopping or signing up for news alerts. Therefore, one possible solution to avoid interference in Section 7 activity but still prohibit this other personal use would be to have a policy prohibiting non-business usage of email, but to provide a clear disclaimer regarding an exception for Section 7 activity (including limiting to sending or reading during non-working hours). The decision applies to all workplaces, not just those where unions are present. Moreover, the decision will be applied retroactively. Purple Commc’ns, Inc. & Commc’ns Workers of Am., AFL-CIO, 361 NLRB No. 126 (2014). 36 | IDC 2014 SURVEY OF LAW
ance coverage claims. Ms. Connors earned her J.D. at the University of Michigan Law School and her undergraduate degree at The George Washington University. James L. Craney is a partner in the Madison County office of Lewis Brisbois Bisgaard & Smith LLP, where his practice focuses upon general liability litigation. During his career, he has defended numerous governmental entities in actions ranging from employment discrimination and wrongful termination to civil rights violation and personal injury. He earned his B.S. from the University of Illinois in Champaign-Urbana and his M.S. from Southern Illinois in Carbondale. He earned his J.D. from St. Louis University, where he also obtained the program’s Health Law Certificate. He is a member of the IDC Employment Law and Local Government Law committees, and is a regular speaker before bar association and industry groups. Andrew R. Makauskas is a partner with the law firm of Brady, Connolly & Masuda, P.C., in its Chicago office. He has been representing corporations and insurance carriers in civil litigation since 1991. He appears regularly before the circuit courts, federal courts, and the Illinois Workers’ Compensation Commission. Mr. Makauskas has made numerous presentations to clients and to the insurance industry. He received his B.A. from the University of Michigan in 1988 and his J.D. from the University of Illinois College of Law in 1991.
Jack J. Murphy is a partner at Clausen Miller, P.C. in its Chicago
employment law committee
office. Mr. Murphy concentrates his practice in civil litigation in the areas of medical malpractice, products liability, employment law, professional liability, and commercial litigation. His practice is diverse and comprises not only of the defense of personal in-
Denise Baker-Seal, Chair
jury cases, including catastrophic personal injury and birth injury
Brown & James, P.C., Belleville
cases, but also the defense of corporate entities and employers
618-235-5590
in actions, including several class actions, involving business torts, breach of
[email protected]
contract, employment discrimination, collective bargaining, and covenants not to compete. He has defended private and municipal entities in over one hundred employment discrimination and civil rights matters dealing with a wide range of statutes and common law torts.
James L. Craney, Vice Chair
Kimberly A. Ross is a partner in the Chicago office of Butler
Lewis Brisbois Bisgaard &
Pappas Weihmuller Katz Craig LLP. She received her J.D.
Smith LLP, Edwardsville
from DePaul University College of Law and her B.A. from the
618-307-7290
University of Michigan. She practices employment law, including
[email protected]
handling claims involving harassment and discrimination under federal and state laws, wage and hour claims, general employment practices, and common law torts such as negligent hiring and retention,
MEMBERS
retaliatory discharge, and defamation In addition to her litigation practice, Ms. Ross frequently conducts seminars for clients in the area of employment law, including harassment and discrimination under Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Illinois Human Rights Act. She also counsels clients on general employment policies and practices, including reductions in force, hiring, performance evaluations, disciplining, conducting investigations, and terminations. In addition, Ms. Ross also drafts employee handbooks and other policies and drafts and reviews agreements between employers and their employees. Ms. Ross was a past Editor in Chief of the IDC Quarterly. In addition to the IDC, she is a member of Defense Research Institute (DRI) (serving as Community Chair of the Employment and Labor Law Committee), the Decalogue Society of Lawyers, and the Women’s Bar Association.
Theresa Bresnahan-Coleman Langhenry, Gillen, Lundquist & Johnson LLC
Julie A. Bruch O’Halloran Kosoff Geitner & Cook, LLC
Molly P. Connors Brady, Connolly & Masuda, P.C.
Andrew Makauskas Brady, Connolly & Masuda, P.C.
Jack J. Murphy Clausen Miller, P.C. Taylor N. Rollinson Ogletree, Deakins, Nash, Smoak
& Stewart, P.C. Kimberly A. Ross Butler Pappas Weihmuller Katz
Jennifer A. Winking is a partner with the Quincy law firm of
Scholz Loos Palmer Siebers & Duesterhaus LLP, where she
Craig LLP
concentrates her practice on employment law and litigation
Geoffrey M. Waguespack Butler Pappas Weihmuller Katz
and workers compensation defense. She has presented for
the Illinois State Bar Association on topics of employment
Craig LLP
law and workers compensation and is a frequent lecturer on various employment topics, including harassment and sensitivity training. She earned her B.A. from Quincy University as a double major graduating summa cum laude and her J.D. from the University of Missouri-Columbia School of Law, where she was Managing Editor of the Missouri Law Review and was inducted into the Order of the Coif.
Thomas H. Wilson HeplerBroom LLC Jennifer A. Winking Scholz Loos Palmer Siebers &
Duesterhaus LLP
Maura Yusof Heyl, Royster, Voelker & Allen, P.C.
IDC 2014 SURVEY OF LAW | 37
Survey of
Insurance Law Cases
Umbrella Policy Did Not Provide Uninsured Motorist Coverage In Huizenga v. Auto-Owners Insurance, the Illinois Appellate Court Third District affirmed the trial court’s order granting summary judgment in favor of an insurance company and ruled that an umbrella policy did not provide uninsured motorist (UM) coverage for an underlying auto accident claim. The plaintiffs sustained injuries in an auto accident with an uninsured driver, and their injuries exceeded $500,000 in damages. At the time of the accident, the insureds were covered under a personal auto policy with coverage for bodily injury ($500,000 per person/per occurrence) and uninsured and underinsured motorist ($500,000 per person/per occurrence). In addition, at the time of the accident, the insureds were covered under an “Executive Umbrella Insurance Policy,” which provided $1,000,000 in excess coverage for “Personal Liability.” Personal liability was defined as “the ultimate net loss in excess of the retained limit which the insured becomes legally obligated to pay as damages because of personal injury or property damage.” The umbrella policy also contained an endorsement with the following language: EXCLUSION OF PERSONAL INJURY TO INSUREDS FOLLOWING FORM We do not cover personal injury to you or a relative. We will cover such injury to the extent that insurance is provided by an underlying policy listed in Schedule A. Schedule A listed the underlying insurance requirements, including comprehensive personal liability of $300,000, and automobile liability, bodily injury of $500,000 each person. The insureds brought a declaratory judgment action against Auto-Owners for excess UM coverage under the umbrella policy for their injuries. Auto-Owners filed a counterclaim for declaratory judgment that the umbrella policy did not provide excess UM coverage. The insureds argued that the second sentence of the endorsement was ambiguous, because the underlying policy listed in Schedule A was the underlying auto policy, which included UM coverage. In affirming summary judgment in favor of the insurer, however, the appellate court noted that Schedule A referred to the “bodily injury liability” and “property damage” portions of the underlying auto
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policy, and made no reference to UM coverage. Therefore, the first sentence of the endorsement was clear that coverage did not extend to first-party personal injuries. Huizenga v. Auto-Owners Ins., 2014 IL App (3d) 120937.
Insured Failed to State Claim for Bad Faith Failure to Settle within Policy Limits In Powell v. American Service Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s ruling that the plaintiff failed to state a cause of action for bad faith against an insurance company. The plaintiff sued Katie Linares, American Service Insurance Co.’s (“ASI”) insured, for injuries allegedly sustained in an auto accident. ASI defended Linares under the terms of her personal auto liability policy, which had indemnity limits of $20,000 per person. During the course of the litigation, the plaintiff’s counsel made a settlement demand for the $20,000 policy limits, and ASI rejected that demand. The underlying case proceeded to trial, and the jury found in favor of the plaintiff, awarding him a net verdict of $47,951.15, but found the plaintiff 40% contributorily negligent. After trial, Linares assigned her rights under the insurance policy to the plaintiff, who filed an action for bad faith against ASI. The appellate court noted that insurers have a duty to act in good faith when responding to settlement offers. The court outlined the elements required to establish bad faith claims, which included the following: (1) the duty to settle arose, (2) the insurer breached the duty, and (3) the breach caused injury to the insured. A sufficient pleading of facts to establish a duty includes: [W]hen a claim has been made against the insured and there is a reasonable probability of recovery in excess of the policy limits and a reasonable probability of a finding of liability against the insured. The duty does not arise until a third-party demands settlement within the policy limits. On appeal, the plaintiff argued that he made a settlement demand within the policy limits and sufficiently pleaded facts to
establish a “reasonable probability of recovery in excess of the policy limits.” That is, he specifically asserted that ASI “was aware” that a worker’s compensation lien and medical bills exceeding $20,000 were sufficient to establish a reasonable probability that recovery would be in excess of the policy limits. The appellate court held that the plaintiff sufficiently pleaded facts to establish that ASI was aware of the potential for damages that exceeded policy limits. The court, however, ruled that the plaintiff must also plead facts sufficient to establish that there was a reasonable probability of liability, meaning that liability was “‘probable,’ as opposed to merely ‘possible.’” It further stated that the plaintiff must plead facts to show that liability is “at least more likely than not.” The plaintiff admitted that he made a potentially illegal U-turn, so the appellate court refused to find a reasonable probability of liability. The court noted that “trial attorneys are not endowed with the gift of prophecy so as to be able to predict the outcome of a personal injury litigation.” The mere fact that the insurance company was unsuccessful in the trial does not necessarily equate with bad faith. The appellate court concluded that plaintiff failed to state a cause of action for bad faith. Powell v. Am. Serv. Ins. Co., 2014 IL App (1st) 123643.
Appellate Court Rules that Policy Provides Underinsured Motorist Coverage for Underlying Claim In Allstate Property and Casualty Insurance Co. v. Trujillo, the Illinois Appellate Court First District reversed the trial court’s ruling that a personal auto policy did not provide underinsured motorist (“UIM”) coverage for an auto accident. Allstate Property and Casualty Insurance Co. (Allstate) issued an auto liability policy to its insured, Adan Delgado, which provided bodily injury coverage with limits of $100,000 per person and $300,000 per occurrence. The policy also included $100,000 per person/$300,000 per occurrence UIM coverage. An Illinois amendatory endorsement to the Allstate policy stated as follows: If the accident involved the use of an [UIM] vehicle, the limits of this coverage will be reduced by: 1. all amounts paid by or on behalf of the owner or operator of the underinsured auto or anyone else responsible. This includes all sums paid under the bodily injury or property damage liability coverage of this or any other auto insurance policy.
Dolores Trujillo was a passenger in a vehicle driven by Delgado when the vehicle was involved in an accident with a vehicle insured by American Access Insurance Co. (American Access). Trujillo settled her claim against the American Access insured for the $20,000 limit of the American Access policy. Trujillo then settled her claim against Delgado in exchange for the $100,000 liability coverage limit of the Allstate policy. Trujillo also made a claim against Allstate for UIM benefits in the amount of $80,000. Allstate took the position that the limits of the UIM coverage were reduced to zero by its $100,000 payment to Trujillo on Delgado’s behalf under the bodily injury coverage of the Allstate policy’s automobile liability insurance. Allstate filed a declaratory action, and the trial court granted Allstate’s motion for judgment on the pleadings, holding that no UIM benefits were available to Trujillo under the Allstate policy. The appellate court reversed. In its holding, the appellate court stated that a tension existed—particularly in the multiple tortfeasor context—between the concept of UIM coverage as intended to place the insured in the same position as if injured by a motorist with insurance in the same amount of the UIM policy, or as intended as a “gap filler” that promises no more than the amount of the insured’s UIM coverage. The appellate court held that the facts of this case would allow Trujillo to seek both bodily injury and UIM benefits. The appellate court remanded the case for further proceedings to ensure that Trujillo did not receive a double recovery for her injuries. Allstate Prop. & Cas. Ins. Co. v. Trujillo, 2014 IL App (1st) 123419.
The Duty to Defend and Reimbursement of Defense Costs In American Service Insurance Co. v. China Ocean Shipping Company (Americas) Inc., the Illinois Appellate Court First District affirmed the trial court’s ruling that an insurance company had a duty to defend and to reimburse past defense costs. A multi-vehicle accident occurred on October 1, 2003, which resulted in the deaths of eight people and injuries to many others. Numerous lawsuits followed against Vincent Zepeda (Zepeda), the alleged at-fault driver, his employer, Frontline Transportation (Frontline), and China Ocean Shipping Company (Americas) Inc. (“COSCO”) and Interpool Titling Trust (Interpool), which allegedly owned, leased, maintained, and/or controlled the trailer being hauled by Zepeda when the accident occurred. American Service Insurance Co. (“ASIC”) filed a complaint asserting that Frontline and Zepeda were insureds under its policy and seeking to provide the court with the entire $1,000,000 policy limits — Continued on next page
IDC 2014 SURVEY OF LAW
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Survey of 2014 Insurance Law Cases (Continued) for equitable distribution. ASIC further requested a declaration that it had no further duty under the policy, including any duty to defend Frontline, Zepeda, or any other party. COSCO and Interpool filed a counterclaim, alleging that ASIC had a contractual duty to defend them in the underlying actions and that plaintiff breached that duty by failing to pay for the costs incurred in the defense. The parties filed cross-motions for summary judgment. The trial court denied the plaintiff’s motion for summary judgment, but granted COSCO and Interpool’s motion, declaring that ASIC was required to defend and indemnify them in the underlying suit because they qualified as insureds under the policy issued by plaintiff. COSCO and Interpool later filed a petition for rehearing, asserting that ASIC failed to reimburse them for costs and attorney fees incurred in the defense. The court granted the petition. ASIC appealed both rulings, and the appellate court affirmed, holding that ASIC could not discharge its duty to defend by tendering the limits of the policy to the court. ASIC subsequently sought discovery, but the trial court denied ASIC’s request, ruling that it was barred by the law of the case doctrine because the court already held that the plaintiff owed COSCO a duty to defend. The appellate court affirmed, noting that the duty to defend was resolved on appeal, and although the court did not address the legal theories of the “target tender” doctrine, the plaintiff had not raised that issue on appeal. As such, the ruling that the plaintiff owed a duty to defend was the law of the case and the plaintiff was barred from re-litigating that issue. Am. Serv. Ins. Co. v. China Ocean Shipping Co. (Ams.) Inc., 2014 IL App (1st) 121895.
Insurer Not Estopped from Denying Coverage Based on Alleged Failure to Disclose Conflict of Interest In Rosalind Franklin University of Medicine & Science v. Lexington Insurance Co., the Illinois Appellate Court First District reversed the trial court’s ruling that an insurer was estopped from denying coverage because its coverage position created a Peppers conflict of interest. Rosalind Franklin University of Medicine and Science (Rosalind) administered a research study of a breast cancer vaccine between 1989 and 2004. After it terminated the study in 2004, approximately 50 of the former study patients filed suit, claiming that the decision to end the study put their lives at risk. Rosalind settled the suits and, in turn, sought coverage from its two insurers, Lexington Insurance Co. (Lexington) and Landmark American Insurance Co. (Landmark). When both carriers denied coverage, Rosalind filed a declaratory judgment action. Lexington
40 | IDC 2014 SURVEY OF LAW
filed a cross-claim against Landmark, contending that Landmark’s policy should provide coverage for the underlying suit and settlement. Lexington issued primary and excess healthcare liability policies to Rosalind, while Landmark issued a directors and officers’ liability policy to Rosalind. The Lexington policy covered liability “resulting from a medical incident arising out of professional services.” The parties filed cross-motions for summary judgment. The trial court granted summary judgment for Rosalind, finding that Lexington had a duty to defend and indemnify Rosalind and that Lexington was estopped from asserting coverage defenses due to a Peppers conflict of interest. The trial court also granted partial summary judgment in favor of Landmark, finding that $500,000 of the settlement was paid by Rosalind to compensate the plaintiffs for pain and suffering, which was excluded by the Landmark policy. Rosalind then moved for entry of a monetary judgment against Lexington based upon the court’s prior order. The trial court granted judgment in favor of Rosalind and against Lexington in the amount of $1,000,000 (minus the self-insured retention). The court allocated the remaining $2,000,000 of the underlying settlement to Landmark and awarded Rosalind pre-judgment interest. On appeal, Lexington argued that it did not undertake the defense of Rosalind, insofar as the defense attorney was not appointed by Lexington. Alternatively, even if the attorney was appointed by Lexington, the record showed that Rosalind did not surrender control of its defense but rather maintained control through the involvement of its general counsel. The court agreed with Lexington on the second point, noting that Rosalind did not surrender control of its defense so as to trigger estoppel under Peppers. According to the appellate court, it was apparent that Rosalind’s general counsel played a substantive role in the defense. On the other issues, the appellate court found that the primary focus of the underlying complaint consisted of activity involving specialized medical knowledge, bringing it within Lexington’s professional liability policies, as well as within the medical malpractice exclusion in Landmark’s policy. Rosalind Franklin Univ. of Med. & Sci. v. Lexington Ins. Co., 2014 IL App (1st) 113755.
Appellate Court Addresses the Duty to Defend under Professional Liability Policy and the Definition of Professional Services In Hilco Trading, LLC v. Liberty Surplus Insurance Corp., the Illinois Appellate Court First District reversed the trial court’s ruling in favor of an insurer on the duty to defend under a professional liability policy. Hilco Trading, LLC purchased a professional liability policy from Liberty Surplus (Liberty), which covered Hilco
Trading, Hilco Appraisal, Hilco Valuation, and other Hilco entities for errors and omissions in rendering professional services. The policy defined “professional services” as those services specified in Item 7 of the Declarations (which included value opinions in support of asset-based lending) provided by the insured to a third party for a monetary fee. The Hilco entities were sued by the Patriot Group and HVB in separate complaints alleging breach of contract and inflated appraisals, and the plaintiffs filed a complaint seeking a declaration that Liberty was obligated to defend both actions. Liberty moved for summary judgment, arguing that it did not have a duty to defend because the policy covered professional services that were provided by an insured to a third party for a fee, and Hilco Appraisal and Hilco Valuation provided professional services only to Hilco Financial, which was not a third party. The trial court granted the motion and the plaintiffs appealed. The appellate court noted that the issue was fairly narrow: whether the professional services of Hilco Appraisal and Hilco Valuation were provided to a third party within the meaning of the policy so as to trigger the duty to defend. The appellate court disagreed with the trial court’s finding that Hilco Appraisal and Hilco Valuation provided their services only to Hilco Financial and not to Patriot Group and HVB. Noting the low threshold for the duty to defend, the appellate court reasoned that Patriot Group and HVB alleged that Hilco Appraisal and Hilco Valuation completed the appraisals with the full knowledge and intent that the appraisals would be distributed to Patriot Group and HVB. Additionally, it was immaterial that the appraisal services were performed for Hilco Financial, so long as the complaints alleged that Patriot Group and HVB also received the appraisals. Because it was alleged that Hilco Appraisal and Hilco Valuation were fully aware of the purpose and intended use of the appraisals before the appraisals were delivered to Hilco Financial, Liberty could not prevail on its argument that Hilco Appraisal and Hilco Valuation provided the appraisals only to Hilco Financial. Hilco Trading, LLC v. Liberty Surplus Ins. Corp., 2014 IL App (1st) 123503.
Insurer Owed Duty to Defend Underlying Illinois Forcible Entry and Detainer Act Lawsuit In John T. Doyle Trust v. Country Mutual Insurance Co., the Illinois Appellate Court Second District affirmed the trial court’s ruling that an insurance company had a duty to defend its insured in an underlying suit alleging violations of the Illinois Forcible Entry and Detainer Act, 735 ILCS 5/9–101, et seq. The John T. Doyle
Trust (Doyle) owned a building in Galena, Illinois, and leased it to Christian K. Karkiewicz-Lane (Christian). During the term of the lease, Doyle sold the premises, and, in turn, removed Christian’s personal property without his permission, placing his items in a garbage dump or in storage. The items include various pieces of artwork that Christian created throughout the years.
The court rejected Country Mutual’s attempt to limit the term “eviction” to an eviction of a person, noting that if the insurer had intended to limit “eviction” to evicting a person and not property, it could have added language in the policy to reflect that intent.
Christian filed suit in federal court, alleging violations of the Visual Artists Rights Act of 1990, conversion, and a violation of the Illinois Forcible Entry and Detainer Act. Among other allegations, Christian alleged that Doyle knew that he had a valid lease but evicted him without providing written notice or filing a complaint pursuant to the Forcible Entry and Detainer Act. Doyle tendered the suit to Country Mutual, its insurance carrier, which denied coverage. Doyle then filed a declaratory judgment action against Country Mutual, and Country Mutual filed a counterclaim for declaratory judgment. Country Mutual’s policy provided coverage for wrongful eviction, which was defined as “depriving a tenant of the right to enjoy leased premises.” Country Mutual argued that the term “eviction” was limited to the eviction of a person, not the property kept by the person in the leased premises. The appellate court held that the federal lawsuit alleged violations of the Forcible Entry Detainer Act by evicting Christian and disposing of his personal property. The court rejected Country Mutual’s attempt to limit the term “eviction” to an eviction of a person, noting that if the insurer had intended to limit “eviction” to evicting a person and not property, it could have added language in the policy to reflect that intent. John T. Doyle Trust v. Country Mut. Ins. Co., 2014 IL App (2d) 121238.
— Continued on next page
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Survey of 2014 Insurance Law Cases (Continued)
Umbrella Policy Did Not Provide Underinsured Motorist Coverage In Mei Pang v. Farmers Insurance Group, the Illinois Appellate Court First District affirmed the trial court’s ruling that an umbrella policy did not provide underinsured motorist (UIM) coverage to a passenger injured in an insured motor vehicle. Mei Pang (Pang) was injured in a motor vehicle collision while riding as a passenger in a vehicle she did not own. Pang filed a declaratory judgment action against Farmers Insurance Group (Farmers) seeking UIM coverage under Farmers’ umbrella policy issued to the driver of the vehicle in which she was a passenger. The Farmers policy defined “insured” as: 1) the named insureds; 2) the named insureds’ relative by blood marriage or adoption; or 3) any person under the age of 21 in the care of the named insureds. Farmers argued that Pang did not meet the definition of “insured” and, therefore, was not entitled to any UIM coverage under the policy. The trial court dismissed Pang’s complaint, finding that Pang was not an “insured” under the policy. On appeal, Pang argued that, as a passenger, she was entitled to UIM coverage under the umbrella policy because the Illinois Insurance Code and case law mandated that bodily injury liability coverage include permissive passengers in the definition of insured. In rejecting Pang’s argument, the court noted the distinct difference between primary automobile liability policies, which may not exclude permissive passengers from UIM coverage, and the umbrella policy under which Pang sought coverage. The court further noted that Illinois has no statutory or public policy requirement that obligated Farmers to provide UIM coverage under its umbrella policy. Pang v. Farmers Ins. Grp., 2014 IL App (1st) 123204.
The Targeted Tender Doctrine, Equitable Contribution, and Equitable Subrogation In AMCO Insurance Co. v. Cincinnati Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s ruling that an insurer was not entitled to state a cause of action for equitable contribution or equitable subrogation against another insurer that the insured had deselected. Kevin Smith filed suit against Hartz Construction Company (Hartz), Cimarron Construction Company, Inc. (Cimarron), and Van Der Laan Brothers, Inc. (Van Der Laan), for injuries sustained at a construction site. Cincinnati Insurance Company (Cincinnati) issued a general liability policy to Hartz. Erie Insurance Company (Erie) issued a general liability policy to Van Der Laan. AMCO Insurance Company (AMCO) issued a general liability policy and an umbrella policy to Cimarron. Hartz made a targeted tender to AMCO and Erie, stating 42 | IDC 2014 SURVEY OF LAW
in its correspondence that it wanted the Cincinnati policy to operate as standby coverage only. Both AMCO and Erie accepted Hartz’s tender, subject to reservation of rights. Cincinnati refused to pay any money toward settlement of the underlying lawsuit and took the position that AMCO and Erie’s primary limits had to be exhausted before Cincinnati was obligated to respond. AMCO paid $1,450,000 on behalf of Hartz and Cimarron. AMCO allocated $550,000 to the AMCO primary policy and $450,000 to the AMCO umbrella policy on behalf of Hartz and $450,000 to the AMCO primary policy on behalf of Cimarron. The settlement agreement contained an assignment of rights to AMCO by Hartz and Cimarron of “any and all rights, claims and causes of action Hartz and/or Cimarron have to recover any sums from [Cincinnati] and/or [Erie].” AMCO then filed a declaratory judgment action against Cincinnati and Erie, asserting claims for equitable contribution and equitable subrogation, and adding a count entitled “other insurance.” Cincinnati filed a motion to dismiss, arguing that, due to Hartz’s targeted tender, AMCO could not state any claims against Cincinnati. Cincinnati also argued that, with respect to the AMCO umbrella policy, the Erie policy was required to exhaust before reaching Cincinnati’s coverage. The trial court granted Cincinnati’s motion to dismiss with prejudice, and the appellate court affirmed. The appellate court ruled that the targeted tender doctrine did not allow an insurer to deselect itself as a targeted insurer following settlement of the underlying lawsuit. The appellate court further stated that allowing an insurer to settle an underlying lawsuit, take an assignment, and then pursue the deselected carrier would eviscerate the purpose of the targeted tender doctrine. In addition, the court noted that, after AMCO paid the settlement, Hartz had no claim for recovery against Cincinnati, and Hartz’s assignment was therefore meaningless. AMCO Ins. Co. v. Cincinnati Ins. Co., 2014 IL App (1st) 122856.
Coverage for Additional Insured Was Excess over Other Insurance and Estoppel Did Not Apply In Certain Underwriters at Lloyd’s, London v. Central Mutual Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s ruling that an insurance policy’s “other insurance” clause rendered the policy excess over another carrier’s policy. Certain Underwriters at Lloyd’s, London (Lloyd’s) issued a commercial general liability policy to general contractor Golden Nail Builders, Inc. (Builders). Builders subcontracted with Erik Electric Service, Inc. (Erik Electric), and the subcontract required
Erik Electric to maintain insurance coverage for Builders as an additional insured. The subcontract did not specify whether the additional insured coverage was to be primary or excess. Erik Electric was insured under a general liability policy issued by Central Mutual Insurance Co. Both Builders and Erik Electric were sued by an employee of a subcontractor injured on the jobsite. Builders tendered to Lloyd’s, which accepted subject to a reservation of rights. Builder’s defense counsel then tendered Builder’s defense to Central Mutual. Central Mutual acknowledged the tender and requested further explanation from Builder’s counsel as to why Central Mutual’s policy provided coverage. After sending several letters to Builder’s counsel with no response, Central Mutual sent correspondence to Builder’s counsel that stated it deemed the tender withdrawn due to the “silence on the matter,” and Central Mutual denied coverage. Lloyd’s then “re-tendered” Builder’s defense to Central Mutual, explaining why it believed that Central Mutual’s policy provided primary coverage to Builders. Following a denial of coverage by Central Mutual, Lloyd’s filed a declaratory judgment action. The trial court granted summary judgment in favor of Central Mutual. The Lloyd’s policy included an “other insurance” clause, stating that coverage was primary, except when “any other insurance” was available. The Central Mutual policy also contained an “other insurance” clause, which provided that coverage afforded to an additional insured was excess over “any other valid and collectible insurance available to the additional insured whether primary, excess, contingent or any other basis unless a contract specifically requires that this insurance be either primary or primary and noncontributing.” The appellate court rejected Lloyd’s argument that the two “other insurance” clauses cancelled each other out, thereby rendering the insurers co-primary. The court found that the clear and unambiguous condition precedent in Central Mutual’s “other insurance” clause was not satisfied because the subcontract did not require the additional insured coverage to be primary over other available coverage. The court also rejected Lloyd’s estoppel argument, finding that the doctrine did not apply where Central Mutual had no duty to defend as an excess insurer. Certain Underwriters at Lloyd’s, London v. Cent. Mut. Ins. Co., 2014 IL App (1st) 133145.
Uninsured Motorist Coverage and the Definition of “Spouse” In Gaudina v. State Farm Mutual Automobile Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s
ruling that a driver was not an insured under his wife’s policy based upon the policy’s definition of “spouse.” Robert Gaudina was injured in an auto accident while working as a limo driver. After settling his bodily injury claim against the at-fault driver for policy limits ($250,000), he filed an underinsured motorist (UIM) claim with State Farm under a personal auto policy issued to his wife. State Farm denied coverage on the grounds that Gaudina was not an insured under his wife’s policy because, at the time of the accident, he was not residing primarily with his wife. The policy covered the named insured’s spouse, but the policy defined a “spouse” as “your husband or wife who resides primarily with you.” Gaudina filed a declaratory action against State Farm, and the parties moved for summary judgment. The trial court ruled that State Farm did not owe UIM coverage. On appeal, Gaudina argued that the term “spouse” should be given its universally understood meaning. State Farm argued that the policy’s definition of “spouse” was clear and unambiguous. The appellate court noted that, because the term was specifically defined in the policy, the definition in the policy controlled. Considering the dictionary definition of “primarily,” the court concluded that a “spouse” is a named insured’s husband or wife who resides “principally” with the insured. The court rejected Gaudina’s argument that “spouse” was ambiguous because the policy did not specify a relevant period for determining when a person resides primarily with an insured. Instead, the court reasoned that questions of applicable coverage can be determined only as of the time of the accident and that a determination of whether Gaudina was a spouse had to be made by referring to the circumstances as they existed at the time of the accident giving rise to the claim. Gaudina v. State Farm Mut. Auto. Ins. Co., 2014 IL App (1st) 131264.
Potential for Excess Judgment Created Conflict Requiring Insurer to Relinquish Control of the Insured’s Defense In Perma-Pipe, Inc. v. Liberty Surplus Insurance Corp., the United States District Court for the Northern District of Illinois granted summary judgment in favor of the insured and ruled that the nontrivial possibility of an excess judgment against the insured created a conflict of interest that required the insurer to allow the insured to control its own defense. The coverage lawsuit arose out of a claim for $40 million in damages caused by the failure of pipes manufactured by Perma-Pipe, Inc. and installed at the University of California. Two lawsuits were filed against Perma— Continued on next page
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Survey of 2014 Insurance Law Cases (Continued) Pipe, and Perma-Pipe tendered to its general liability insurer, Liberty Surplus Insurance Corporation (Liberty Surplus). The Liberty Surplus general liability policy limits were $1 million per occurrence and $2 million in the aggregate. Although Liberty Surplus initially reserved rights and afforded Perma-Pipe the opportunity to select independent counsel, Liberty Surplus subsequently withdrew its reservation and sought to appoint defense counsel in lieu of independent defense counsel. Perma-Pipe argued that it was entitled to independent defense counsel and filed suit against Liberty Surplus for breach of contract and violation of Section 155 of the Illinois Insurance Code. Perma-Pipe then filed a motion for summary judgment on the breach of contract claim. In response, Liberty Surplus argued that the decision of the U.S. Court of Appeals for the Seventh Circuit in R.G. Wegman Construction Co. v. Admiral Insurance Co., 629 F.3d 724 (7th Cir. 2011), was distinguishable because the insurer in that case did not tell Wegman about the potential for an excess judgment until the eve of trial. Liberty Surplus asserted that Perma-Pipe had been aware of the potential for an excess judgment since the beginning of the litigation and already had notified its excess carriers. Judge Guzman held that the basis for the conflict was the same, despite the timing, and that a conflict of interest prohibited Liberty Surplus from controlling Perma-Pipe’s defense. In so ruling, Judge Guzman noted that there was a risk that Liberty Surplus would decide to try claims exceeding the primary limit, hoping that the resulting liability would be less than the primary limit, despite the risk that Perma-Pipe could be found liable for far more than the primary limit. Perma-Pipe, Inc. v. Liberty Surplus Ins. Corp., 38 F. Supp. 3d 890 (N.D. Ill. 2014).
Co-Insurer Is a Necessary Party to Declaratory Judgment Action In Pekin Insurance Company v. Rada Development, LLC, the Illinois Appellate Court First District affirmed the trial court’s ruling that a co-insurer was a necessary party to a declaratory judgment action to determine coverage for the mutual insured. Pekin Insurance Company (Pekin) filed a declaratory judgment action against Rada Development (Rada) and Barnabus Sutton, seeking a determination that Rada was not an additional insured under the policy that Pekin issued to Chicago Masonry, a co-defendant with Rada in the underlying personal injury lawsuit. Rada did not respond to the declaratory complaint and was defaulted. The trial court ruled that Pekin did not have a duty to defend Rada, but Certain Underwriters at Lloyd’s, London (Lloyd’s) filed a petition to vacate the judgment on the grounds that it was a necessary party to Pekin’s
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declaratory action. Chicago Masonry had tendered its defense to Pekin, and Rada had tendered its defense to Lloyd’s, which issued a general liability policy to Rada. Lloyd’s agreed to defend Rada subject to a reservation of rights. Lloyd’s tendered Rada’s defense to Chicago Masonry and Pekin on the basis that Rada was an additional insured under Pekin’s policy. Pekin refused to defend Rada and argued that it did not have a duty to defend because there was no written contract in place between Rada and Chicago Masonry that required Chicago Masonry to add Rada as an additional insured. After filing the declaratory judgment action, Pekin acknowledged receipt of Lloyd’s tender and rejected it. The trial court vacated the judgment in favor of Pekin because, despite having knowledge of Lloyd’s coverage position, Pekin never named Lloyd’s as a defendant in the declaratory judgment action. The appellate court agreed, reasoning that the default judgment entered against Rada required that Lloyd’s continue defending Rada in the underlying lawsuit, despite its attempt to tender Rada’s defense to Pekin on the basis of various provisions and agreements. Thus, the judgment in the declaratory judgment action materially affected Lloyd’s interests such that Lloyd’s was a necessary party to the declaratory judgment action. Pekin Ins. Co. v. Rada Dev., LLC, 2014 IL App (1st) 133947.
Appellate Court Denies Rescission of Insurance Policies In Certain Underwriters at Lloyd’s, London v. Abbott Laboratories, the Illinois Appellate Court First District affirmed the trial court’s order denying rescission of product recall insurance policies issued by Certain Underwriters at Lloyd’s, London (Lloyd’s) to Abbott Laboratories (Abbott) for a three-year term. Lloyd’s sued Abbott to rescind the policies, arguing that Abbott had made material misrepresentations on the insurance applications regarding potential risks created by its acquisition of Knoll Pharmaceutical Company. Abbott counterclaimed, seeking a declaration of coverage, damages for breach of contract, and damages for vexatious delay under Section 155 of the Insurance Code. 215 ILCS 5/155(1). The trial court rejected the rescission argument and the vexatious delay claim. As to damages, the trial court found in favor of Abbott on its breach of contract claim and awarded Abbott $84.5 million. On appeal, Lloyd’s argued that the policies should have been rescinded and that it had not ratified coverage or waived rescission. The parties agreed that, when the insurance application includes “knowledge and belief” language, it established a lesser standard of accuracy than that imposed under section 154 of the Illinois Insurance Code, 215 ILCS 5/154, and shifted the focus from an inquiry
into whether the facts asserted were true to the applicant’s actual knowledge and belief. The appellate court noted that the insurance policies in question automatically covered the Knoll purchase and that the only matter to be determined was the amount of the premium. The appellate court agreed with Abbott that Lloyd’s had ratified the terms and waived rescission when it accepted the premiums and failed to request Knoll’s due diligence documentation in a timely manner. Certain Underwriters at Lloyd’s, London v. Abbott Labs., 2014 IL App (1st) 132020.
Excess Carrier Did Not Have a Duty to Settle within Limits or Advise Insureds of Potential Conflicts In Fox v. American Alternative Insurance Corp., the United States Court of Appeals for the Seventh Circuit affirmed the trial court’s ruling in favor of an excess insurer on the issues of the duty to settle and disclosure of a potential conflict of interest. Kevin Fox was falsely accused and arrested for murder, and upon his release from prison he sought compensatory and punitive damages in federal court against various Will County detectives.
Kevin Fox was falsely accused and arrested for murder, and upon his release from prison he sought compensatory and punitive damages in federal court against various Will County detectives.
St. Paul Fire & Marine Insurance Company (St. Paul) provided the first layer of liability coverage to the County’s law enforcement personnel, and the policy required St. Paul to defend the detectives until the $1 million limit was exhausted by payment of judgments or settlements. The County also had two layers of excess coverage, one from American Alternative Insurance Corp. (“AAIC”), which was secondary, and the other from Essex Insurance Company, with was tertiary. AAIC was not required to assume charge of the settlement or defense until the aggregate limit of the St. Paul policy had been exhausted by payment of claims. The jury found in favor of Fox and awarded $15.5 million
in damages against the County, including $6.2 million in punitive damages. By September 2008, St. Paul had exhausted its $1 million liability limit and AAIC then took control of the defense. The detectives and Fox agreed to a settlement whereby the detectives assigned to Fox all claims they had against the insurers in exchange for a covenant not to execute the punitive damages award against the detectives’ personal assets. Fox then sued all three insurers, seeking damages for their alleged breaches of duty to the detectives in the amount of the punitive damages awarded against the detectives. After numerous appeals, AAIC was the sole remaining defendant, and Fox sought a declaration that AAIC breached its duty of good faith by failing to settle the claims within policy limits and by failing to inform the detectives of a potential conflict of interest. AAIC moved to dismiss the complaint for failure to state a claim, and the district court granted that motion. The court reasoned that AAIC, as an excess insurer, never had any control over the detectives’ defense before entry of the underlying judgment and therefore had no duty to settle the claims or to alert them of potential conflicts of interest. The appellate court affirmed, noting that AAIC was not the primary insurer, and as an excess insurer it had no duty to defend the detectives until St. Paul exhausted its limits. In the absence of a duty to defend, AAIC had no obligation to settle any claims or to inform the detectives on any potential conflicts of interest. Fox also did not make any settlement demands within the time after AAIC took over control of the detectives’ defense. Once AAIC assumed control of the case on appeal, no potential conflict of interest arose regarding either punitive damages or joint representation. Fox v. Am. Alt. Ins. Corp., 757 F.3d 680 (7th Cir. 2014).
Underinsured Motorist Coverage and “Use” of a Covered Auto In Kim v. State Farm Mutual Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s ruling that an insurer owed underinsured motorist (UIM) coverage to an injured insured who was not occupying a vehicle at the time of the accident. Decedent Michael Kim worked for Terra Engineering (Terra) installing traffic counting devices. Kim was struck and killed by an underinsured motorist while outside of his Terra van, and his estate sought UIM coverage from Terra’s insurer, State Farm Mutual Automobile Insurance Company (State Farm). State Farm denied coverage, and Kim’s estate filed a declaratory judgment action. The circuit court granted summary judgment for Kim, and State Farm appealed. — Continued on next page
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Survey of 2014 Insurance Law Cases (Continued) On appeal, State Farm argued that Kim did not qualify for UIM coverage under Terra’s policy because he was not an insured under the policy’s UIM provisions. For purposes of general liability coverage, the policy defined an insured as “any person while using your car . . . if its use is within the scope of your consent.” For UIM coverage, the policy defined insured as “any person while occupying a vehicle covered under the liability coverage.” The appellate court noted that under Illinois law an insurance policy cannot define “insured” differently for purposes of liability and UIM coverages. Therefore, State Farm’s attempt to limit the definition of “insured” for UIM purposes to persons “occupying a vehicle,” when no such restriction existed for liability coverage, violated the UIM statute. The appellate court then determined that Kim qualified as an insured under the general liability coverage because, by using the Terra vehicle’s oscillating yellow light as a warning to other drivers while he worked, Kim was “using” the vehicle and qualified as an insured for both liability and UIM purposes. Kim v. State Farm Mut. Ins. Co., 2014 IL App (1st) 131235.
Insurer Was Not Estopped from Raising Coverage Defenses to Construction Defect Lawsuit In Nautilus Insurance Company v. Board of Directors of Regal Lofts Condominium Association, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s ruling that an insurer did not have a duty to defend an underlying construction defect lawsuit. A property developer of condominiums purchased two commercial lines policies from Nautilus Insurance Co. (Nautilus). The developer completed construction in 2000, and the condominium board (condo board) formed shortly thereafter. As early as May of 2000, one unit owner was aware of water leaks that were causing damage in the building. In 2005, the condo board hired a consultant to investigate the water leaks, and the consultant determined that the leaks were caused by faulty construction work. In 2008, the condo board sued the developer. The developer tendered both the original complaint and an amended complaint to Nautilus, but Nautilus denied coverage. After the condo board filed a second amended complaint alleging that the developer’s negligence caused damage to personal property in addition to damage to the building itself, Nautilus filed a declaratory judgment action. In 2011, the developer settled the underlying lawsuit and assigned to the condo board its rights to insurance proceeds. The condo board then stepped in to contest Nautilus’ motion for summary judgment in the coverage lawsuit, which the district court granted. On appeal, the board argued that the property damage at issue
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was caused by a covered “occurrence.” The appellate court found that the original complaint and the first amended complaint clearly did not allege “property damage” or an “occurrence” as defined in the Nautilus policies because the allegations were strictly directed at the damage to the building itself. The board also argued that Nautilus was estopped from raising any coverage defenses because it took no action for almost two years after it first received notice of the underlying lawsuit. The appellate court agreed that there would have been an unreasonable delay if estoppel was measured from the filing of the original complaint. The court, however, determined that the proper calculation was from the date when the condo board’s second amended complaint was tendered to Nautilus because estoppel is not applicable if the insurer had no duty to defend. The appellate court ruled that the five month delay, and 16 months before the developer settled, was not an unreasonable delay as a matter of law. Nautilus Ins. Co. v. Bd. of Dirs. of Regal Lofts Condo. Ass’n, 764 F.3d 726 (7th Cir. 2014).
Insurer Not Estopped from Denying Coverage for Blast-Fax Lawsuit In G.M. Sign, Inc. v. State Farm Fire and Casualty Co., the Illinois Appellate Court Second District reversed the trial court’s ruling that an insurer was estopped from denying coverage for an underlying blast-fax lawsuit. G.M. Sign, Inc. filed a class action lawsuit against Michael Schane and his company for sending unsolicited fax advertisements in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq. Schane tendered to State Farm, which denied coverage based upon a policy endorsement entitled “Distribution of Material in Violation of Statutes Exclusion Endorsement.” Schane subsequently settled with G.M. Sign for $4.9 million and entered into a settlement agreement whereby G.M. Sign agreed not to execute the judgment against Schane and to seek recovery only against State Farm. G.M. Sign sought leave to file an amended complaint, the admitted purpose of which was to plead into possible coverage available under the State Farm policy. Counts II and III alleged conversion and consumer fraud. G.M. Sign then filed a declaratory judgment action against State Farm and argued that State Farm was estopped from raising any coverage defenses because it failed to defend Schane under a reservation of rights or to file a timely declaratory judgment action. In response, State Farm filed a motion for judgment on the pleadings. G.M. Sign filed a cross-motion, and the trial court ruled in favor of G.M. Sign, finding that State Farm owed a duty to defend and indemnify Schane under the policy. The trial court
later held that State Farm was estopped from raising any coverage defenses because judgment was entered against Schane after State Farm denied coverage and before the filing of a declaratory judgment action. On appeal, State Farm argued that it did not have a duty to defend Schane because its Distribution of Material in Violation of Statutes Exclusion Endorsement precluded coverage for the counts alleging conversion and consumer fraud. The appellate court agreed with State Farm that the amended complaint did not allege claims that fell potentially within coverage. In so ruling, the appellate court noted that the endorsement excluded coverage for property damage or advertising injury “arising directly or indirectly” out of any action or omission that violates or is alleged to violate the TCPA or any other statute. Based upon this wording, the court reasoned that the proper analysis was whether “but for” Schane’s alleged act of sending faxes that violated the TCPA, G.M. Sign would have suffered injury. G.M. Sign argued that the conversion and consumer fraud counts were premised upon different facts than the TCPA count and were broad enough to include faxes that did not violate the TCPA. The appellate court disagreed, noting that Counts II and III, while cleverly pled, nevertheless were based upon the same facts as the TCPA count. Because there was no duty to defend, State Farm was not estopped from raising its policy defenses. G.M. Sign, Inc. v. State Farm Fire & Cas. Co., 2014 IL App (2d) 130593.
No Coverage Based upon Non-Trucking Use Endorsement Exclusion In Argonaut Midwest Insurance Co. v. Morales, the Illinois Appellate Court First District affirmed the trial court’s ruling in favor of a non-trucking use insurer and concluded that the insurer did not have a duty to defend a truck driver in an underlying lawsuit. Gabriel Morales entered into an Owner Operator Contract with Land Truck, Inc. The contract described Land Truck as a common carrier and identified Morales as an independent contractor and owner of a truck. The contract provided that, unless required by statute or ordinance, Land Truck would not provide any insurance to Morales and that Morales would carry his own insurance, including Bobtail insurance, naming Land Truck as an additional insured. Argonaut issued a $1 million policy to Morales, and the policy included in the schedule of covered “autos” a 2003 Freightliner. Morales was involved in an accident while driving the 2003 Freightliner and injured three people. The injured claimants sued Morales and Land Truck, alleging negligence. Argonaut then filed
The appellate court found that the Owner Operator Contract between Morales and Land Truck was a “rental agreement” because federal statutes and regulations required Land Truck to assume exclusive control of Morales’s truck during the term of the lease. The court also found that the term “rented” was unambiguous and that because the terms “lease” and “rent” were used differently in the policy they had to be interpreted differently.
a declaratory judgment action against Morales, Land Truck, and the claimants, asserting that it had no duty to defend or to indemnify Morales or Land Truck. Alternatively, Argonaut claimed that defense costs should be apportioned between itself and Land Truck’s own insurer, Insurance Company of the State of Pennsylvania. The parties filed cross-motions for summary judgment, and the trial court granted Argonaut’s motion. On appeal, the appellants argued that Argonaut’s TruckerInsurance for Non-Trucking Use endorsement, which stated that the policy did not apply to a covered auto “while used in the business of anyone to whom the auto is rented,” did not apply and that Land Truck was an insured under the policy. The appellants argued that Land Truck did not “rent” the Freightliner because it did not take exclusive possession or control of it, and that the term “rented” was ambiguous and must be construed against Argonaut. The appellate court found that the Owner Operator Contract between Morales and Land Truck was a “rental agreement” because federal statutes and regulations required Land Truck to assume exclusive control of Morales’s truck during the term of the lease. The court also found that the term “rented” was unambiguous and that because the terms “lease” and “rent” were used differently in the policy they had to be interpreted differently. The appellants also argued that Land Truck was an insured under the policy because the definition of “insured” included “anyone liable for the conduct of an insured described above but only to the extent of that liability.” The appellate court rejected this argument because the “Insurance for Non-Trucking Use” endorsement specifically provided that “Who Is An Insured — Continued on next page
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Survey of 2014 Insurance Law Cases (Continued) does not include anyone engaged in the business of transporting property by ‘auto’ for hire who is liable for your conduct.” Argonaut Midwest Ins. Co. v. Morales, 2014 IL App (1st) 130745.
Insurer Estopped from Raising Policy Defenses, Including Defense that Named Insured Was Not Liable for the Claimant’s Injuries In Mt. Hawley Insurance Co. v. Certain Underwriters at Lloyd’s, London, the Illinois Appellate Court First District affirmed the trial court’s ruling that an insurer was estopped from denying a duty to indemnify its additional insureds for an underlying construction accident lawsuit. Mt. Hawley Insurance Co. (Mt. Hawley) insured the owner and the general contractor of a construction project, and Certain Underwriters at Lloyd’s, London (Lloyd’s) insured a subcontractor, Toji Engineering, Ltd., hired by the general contractor. The owner and general contractor were additional insureds on the Lloyd’s general liability policy for bodily injury caused in whole or in part by Toji’s acts or omissions. An injured construction worker filed a lawsuit naming all of the above parties as defendants, and the owner and general contractor tendered to Lloyd’s, which denied coverage on the grounds that the lawsuit did not allege that the additional insureds were vicariously liable for the acts or omissions of Toji. Toji filed a motion for summary judgment in the underlying lawsuit, which the court granted. The general contractor and the owner asked Lloyd’s to reconsider its coverage position, but Lloyd’s refused to do so. The parties then settled the underlying lawsuit with Mt. Hawley paying the settlement. Mt. Hawley filed a declaratory judgment action against Lloyd’s, asserting that Lloyd’s had a duty to defend and indemnify the additional insureds and that Lloyd’s was estopped from raising any coverage defenses. The trial court entered summary judgment in favor of Mt. Hawley, finding that the allegations of the underlying lawsuit potentially fell within the Lloyd’s coverage and that Lloyd’s was estopped from raising policy defenses to indemnification. On appeal, Lloyd’s conceded that it had a duty to defend the additional insureds, that it had wrongfully denied the tender, and that it was estopped from asserting policy defenses to indemnification. Lloyd’s, however, argued that it did not have a duty to indemnify the additional insureds because Toji was found not liable for any negligence in the underlying lawsuit by virtue of the summary judgment ruling in its favor. The appellate court rejected Lloyd’s argument and affirmed the trial court’s ruling of estoppel. The court explained that the defense based on the summary judgment granted in favor of
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Toji was a defense regarding the scope of coverage and that Lloyd’s entire defense was based upon limiting language in the insurance policy. Thus, there was no distinction to be drawn between Lloyd’s proposed defense based upon Toji’s summary judgment ruling and any other policy defenses, all of which had the same substantive effect of denying coverage to an insured based upon the terms of the policy. Therefore, Lloyd’s was found to owe indemnity to the additional insureds. Mt. Hawley Ins. Co. v. Certain Underwriters at Lloyd’s, London, 2014 IL App (1st) 133931.
TCPA, Punitive Damages, Liquidated Damages, Settlement Agreement In Central Mutual Insurance Co. v. Tracy’s Treasures, Inc., the Illinois Appellate Court First District reversed in part and affirmed in part the trial court’s rulings in connection with the settlement of an underlying blast-fax case. Tracy’s Treasures, Inc. (Tracy’s) was insured under a number of primary and excess policies issued by Central Mutual Insurance Company (Central Mutual). Paul Idlas filed a class action lawsuit against Tracy’s, asserting violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(b)(1). Central Mutual denied coverage but offered to provide a courtesy defense while also filing a declaratory judgment action. Central Mutual also agreed to a substitution of defense counsel, who was already discussing settlement of the underlying class action. Tracy’s and Idlas settled the class action lawsuit for $14 million, which by agreement was enforceable only against Central Mutual’s policies. Tracy’s and Idlas argued that Central Mutual could not challenge its obligation to pay the settlement. Central Mutual moved for summary judgment, arguing that the $14 million settlement reached between Idlas and Tracy’s was collusive and unreasonable as a matter of law under the standards articulated by the Illinois Supreme Court in Guillen v. Potomac Insurance Co. of Illinois, 203 Ill. 2d 141 (2003). The trial court denied the motion, finding that the claims raised several disputed issues of fact. Central Mutual also sought summary judgment on the basis that, as a result of an agreement between Tracy’s and Central Mutual, the policies no longer provided coverage for either “advertising injury” or “personal and advertising injury.” The trial court denied Central Mutual’s motion, finding that since Idlas’s rights vested on July 22, 2003, when Idlas received his fax, “Tracy’s and Central [Mutual could not] agree to divest Idlas in a secret agreement concluded in November of 2005.” On appeal, the court concluded that Tracy’s ability to settle the underlying suit without Central Mutual’s permission, did not,
standing alone, render the settlement automatically binding on Central Mutual and that Central Mutual had the right to contest the reasonableness of the settlement because it neither breached the duty to defend nor controlled the insured’s defense. The appellate court remanded the case to the trial court for a hearing on whether the underlying settlement was reasonable. The trial court also would have to determine on remand whether counsel for Tracy’s and Idlas colluded in agreeing to a settlement in an amount, perhaps coincidentally, equal to the value of Central Mutual’s insurance. The appellate court also left for the trial court to determine the effect of Central Mutual’s buyout of coverage for personal and advertising injury. Several years before the Idlas suit, Tracy’s was involved in another suit involving the TCPA filed by White. In connection with Central Mutual’s settlement of that matter, Tracy’s had agreed, in a confidential settlement agreement, that all of the insurance policies issued by Central Mutual were reformed to eliminate coverage for “advertising injury” and “personal and advertising injury.” The trial court had ruled that the agreement between Tracy’s and Central Mutual was not binding on Idlas because Idlas’s rights as a third party beneficiary of the insurance contracts had vested before modification of those contracts to eliminate coverage for “personal and advertising injury.” The appellate court ruled that, although prior cases did not preclude the court from giving effect to the agreement, the appellate court could not overrule the trial court because it did not have a copy of the agreement before it on appeal and also it could not determine as a matter of law that the amount paid by Central Mutual was adequate consideration for the buyout of the coverage. Cent. Mut. Ins. Co. v. Tracy’s Treasures, Inc., 2014 IL App (1st) 123339.
The Trigger of Coverage for Malicious Prosecution Lawsuits Is the Commencement of the Malicious Prosecution In St. Paul Fire & Marine Insurance Co. v. City of Zion, the Illinois Appellate Court Second District affirmed the trial court’s ruling that the event triggering coverage under law enforcement liability policies was the date that the wrongful prosecution was commenced rather than the date that the charges were dismissed. Hobbs was arrested and charged with murder, but the charges were later dismissed. Hobbs filed a federal civil rights action against the City of Zion, police officers, and other defendants. St. Paul Fire &
Marine Insurance Co. (St. Paul) insured the defendants under policies that were in force when the charges were dismissed. After Hobbs filed his action, St. Paul filed a declaratory judgment action seeking a declaration that the allegations in the federal complaint did not trigger coverage under the insurance policies it issued to the defendants because the occurrence triggering coverage of a malicious prosecution claim was the commencement of the wrongful prosecution, not the termination in favor of the accused. The trial court agreed with St. Paul, and the appellate court affirmed. The appellate court looked to cases from other states for guidance, as no other Illinois court had previously addressed the issue of which occurrence triggers coverage for a malicious prosecution claim. The appellate court found that the majority of courts in other states had held that the commencement of a malicious prosecution is the event that triggers coverage. The court adopted and followed the majority approach and ruled that, because injury results upon the commencement of a malicious prosecution, it is the commencement of the prosecution that triggers coverage. Therefore, St. Paul did not owe coverage. St. Paul Fire & Marine Ins. Co. v. City of Zion, 2014 IL App (2d) 131312.
Trial De Novo Is Appropriate where Insurer Rejects Underinsured Motorist Coverage Arbitration Award In Nelson v. Country Mutual Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s ruling that vacated an underinsured motorist arbitration award and that ordered a trial de novo. Forest Lee Nelson was driving a company van while employed by Turbo Tubs when he was involved in an accident. The at-fault driver was insured by Nationwide Mutual Insurance Co., and Nelson recovered $90,000 from the at-fault driver. Turbo Tubs was insured by Country Mutual Insurance Co. (Country Mutual), with an underinsured motorists (“UIM”) coverage limit of $1 million. Nelson filed a UIM claim against Country Mutual and the parties agreed to arbitration. The arbitration resulted in an $850,000 award in favor of Nelson. Country Mutual rejected the award and filed for a trial de novo. Nelson filed an appeal challenging the decision of the trial court to vacate the arbitration award and allowing the trial to proceed. Nelson argued that the UIM endorsement did not explicitly provide for a trial de novo remedy upon the rejection of an arbitration award. The appellate court noted that, despite some debate, courts had concluded that trial de novo provisions are valid, enforceable, and — Continued on next page
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Survey of 2014 Insurance Law Cases (Continued) not against public policy. The court concluded that explicit language calling for a trial de novo as the remedy upon rejection of an arbitration award pursuant to UIM coverage was not necessary for trial to be the remedy. The court reasoned that Country Mutual had every right to reject the arbitration award and that the only way to resolve the matter between the parties after the award was rejected was a trial de novo. The court considered it irrelevant that there was no specific language in the policy that ordered a trial de novo. Instead, that remedy was inherent in the arbitration provision allowing for the proper rejection of an arbitration award that is nonbinding because it exceeds the amount of damages that are up to the minimum limits prescribed by Illinois law. Nelson v. Country Mut. Ins. Co., 2014 IL App (1st) 131036.
Underinsured Motorist Coverage— Insured Not Required to Exhaust Rental Car Company’s Coverage In Safeway Insurance Co. v. Hadary, the Illinois Appellate Court First District affirmed in part and reversed in part the trial court’s rulings with regard to whether an insurer owed underinsured motorist coverage. The Hadarys were involved in an auto accident with a vehicle owned by Hertz Corporation and driven by Carlos Velez. Both the Hadarys and Velez had insurance, but Velez declined Hertz’s Liability Insurance Supplement and elected to rely on his own policy. At the time of the accident, Hertz was required to comply with a statute requiring proof of financial responsibility, 625 ILCS 5/9-105. The Hadarys recovered $40,000 (the policy limits) from American Access Casualty Company (American Access), which insured Velez, and then made a UIM claim with their carrier, Safeway Insurance Co. (Safeway), demanding arbitration pursuant to the policy’s UIM coverage form. That form contained an exhaustion clause, and Safeway filed a declaratory judgment action against the Hadarys and Hertz, asking the court to declare that its policy did not provide UIM coverage and that Safeway was not obligated to pay, settle, or arbitrate the UIM claim. The Hadarys filed a counterclaim asserting breach of contract and violation of Section 155 of the Insurance Code, 215 ILCS 5/155(1). Both parties filed cross-motions for summary judgment. The Hadarys argued that Hertz did not provide liability coverage because Hertz offered primary insurance and Velez had declined to purchase it. Therefore, they argued that they had already exhausted all applicable coverage as required by Safeway’s UIM provision. In response, Safeway argued that both Velez’s personal policy and Hertz’s liability as owner must be exhausted before Safeway’s UIM
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coverage was triggered and that Hertz was not absolved of liability when its customer’s personal policy was less than the statutorily required minimum. The trial court granted partial summary judgment in favor of Safeway and against the Hadarys, concluding that Safeway was not obligated to pay until the limits of Hertz’s financial responsibility liability had been exhausted. The question before the appellate court was as follows: when injured insureds are not wholly covered by a negligent driver’s insurance policy limits, does the rental car company or the insured’s UIM coverage pay the shortfall? The appellate court concluded that it would contravene Illinois public policy to construe Safeway’s policy to mean that a rental car company’s liability pursuant to the financial responsibility applies before Safeway’s obligations under the UIM coverage applied. The appellate court commented that the position advanced by Safeway would result in an absurd situation whereby a policyholder would receive more benefits in the fortuitous event of being injured by a car owned by a rental car company than one not owned by a rental car company. Additionally, people injured by a self-insured rental company would enjoy an unlimited amount of compensation as compared to the $50,000 maximum compensation per person from rental companies that file a certificate of insurance or a bond. According to the appellate court, requiring exhaustion of Hertz’s financial responsibility liability would deny the Hadarys the economic value of their UIM coverage for which they paid a premium. Safeway Ins. Co. v. Hadary, 2014 IL App (1st) 132554.
Professional Liability Insurer Did Not Have Any Duty to Defend Insured in Connection with Underlying TCPA Lawsuit In Margulis v. BCS Insurance Co., the Illinois Appellate Court First District affirmed the trial court’s ruling in favor of a professional liability insurer in connection with an underlying TCPA lawsuit. Scott Margulis filed a class action suit against Bradford, an insurance agent/broker, who had transmitted automated calls advertising his services. Bradford’s professional liability carrier, BCS Insurance Co. (BCS), denied coverage and refused to defend him. Bradford and the claimant entered into a settlement agreement for $5 million with the settlement to be satisfied exclusively from insurance proceeds. Margulis then filed a declaratory judgment action against BCS, and the trial court granted BCS’s motion for summary judgment. The BCS policy afforded coverage to Bradford for loss by reason of liability imposed by law for damages caused by any negligent act, error, or omission by Bradford arising out of the conduct of his business
in rendering services for others as a licensed Life, Accident and Health Insurance Agent. The appellate court did not read the allegations in the underlying lawsuit as falling within the potential scope of the policy’s coverage because the allegedly negligent acts, errors, or omissions—the transmission of automated, unsolicited telephone calls advertising Bradford’s services—did not arise out of the conduct of Bradford’s business in rendering services for others as an insurance agent. The robocalls were not to insurance clients of Bradford, and therefore the calls did not constitute a negligent act, error, or omission by Bradford arising out of the conduct of his business in rendering services for others. Margulis v. BCS Ins. Co., 2014 IL App (1st) 140286.
Heather R. Watterson is licensed to practice law in the State of Illinois, the Northern District of Illinois, and the Northern District of Indiana. Since 2013, Ms. Watterson has acted as a claim consultant in the Environmental and Mass Tort Claims group within the legal department at CNA, where she manages environmental, mass tort, and sexual abuse claims and litigation nationwide. Before coming to CNA, Ms. Watterson was a partner at a Chicago law firm, where she primarily focused her practice on tort litigation and school law, with an emphasis on defending non-profit institutions and organizations. She earned her B.A. from Wittenberg University in 1995, an M.S.W./M.S.S.A., from Case Western Reserve University in 1997, and her J.D., from DePaul University College of Law in 2001. Ms. Watterson served as Vice Chair of the IDC Events Committee from 2012–2013, and Chair of the IDC Events Committee from 2013–2014. She has served as a Director-at-Large for the Illinois Association of Defense Counsel since 2013. She was also named a Rising Star by Super Lawyers in 2012 and 2013.
insurance law committee
About the Authors
John D. Hackett, Chair Cassiday Schade LLP, Chicago
John D. Hackett is a partner and member of the Executive Committee of Cassiday Schade LLP, concentrating his practice in insurance coverage litigation. Mr. Hackett has extensive experience in complex insurance coverage disputes. He has a wide variety of clients and is responsible for all aspects of the insurance practice, including the preparation of complex opinion letters, all phases of declaratory judgment litigation, and regulatory/underwriting matters. Mr. Hackett is the Chair of the IDC Insurance Law Committee. Mr. Hackett has been recognized by Law Bulletin Publishing Company as a Leading Lawyer since 2012 in the areas of insurance, insurance coverage, and reinsurance law. Mr. Hackett received his Chartered Property and Casualty Underwriters (CPCU) designation in 1999 and Associate in Risk Management (ARM) designation in 2000. William H. Schramm, III is an associate at Cassiday Schade LLP, where he concentrates his practice in insurance coverage litigation. Mr. Schramm represents both insurance carriers and commercial insureds in matters relating to a broad range of policies, including general and excess liability, property, trucking, directors and officers, errors and omissions, and professional liability policies. W. Scott Trench is a senior associate in the civil litigation department of Brady, Connolly & Masuda, P.C.’s Chicago office. His practice includes insurance coverage litigation and the defense of insured and self-insured clients in state and federal courts in construction, premises liability, employment, and commercial litigation matters. He received his undergraduate degree from Arizona State University in 1995 and his law degree from the DePaul University College of Law in 1999.
312-641-3100
[email protected]
Mollie E. Werwas, Vice Chair Kopon Airdo, LLC, Chicago 312-506-4474
[email protected]
MEMBERS
Stephen R. Ayres Heyl, Royster, Voelker & Allen, P.C.
Kathryn I. Beck Brady, Connolly & Masuda, P.C.
Amanda M. Buishas Johnson & Bell, Ltd. Bill Busse Busse, Busse & Grassé, P.C. James P. DuChatea
Johnson & Bell, Ltd.
R. Howard Jump Jump & Associates, P.C.
William K. McVisk Johnson & Bell, Ltd.
Gregory W. Odom HeplerBroom LLC
Cecil E. Porter, III Litchfield Cavo LLP
Robert H. Sands HeplerBroom LLC
Patrick W. Stufflebeam HeplerBroom LLC
W. Scott Trench Brady, Connolly & Masuda, P.C.
Robert J. Winston Brady, Connolly & Masuda, P.C.
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Survey of
Local Government Law Cases
Complaint’s Failure to Identify Specific Harm to Specific Student Is Basis to Grant Motion to Dismiss for No Willful and Wanton Conduct In Brooks v. McLean County Unit District No. 5, the Illinois Appellate Court Fourth District held that the trial court properly granted a motion to dismiss under Section 2-619.1 of the Illinois Code of Civil Procedure, 735 ILCS 5/2-619.1, on the basis that no facts were plead capable of proving willful and wanton conduct. In the complaint, the plaintiff alleged that the school district was willful and wanton in allowing students to play a game known as “Body Shots,” where students voluntarily allowed other students to strike them in the ribs, abdomen, and chest area with a closed fist. After voluntarily engaging in the game in the restroom, a student exited and died in the school hallway. A special administrator brought suit, claiming that the school district was guilty of willful and wanton conduct by: (1) failing to monitor the bathrooms; (2) failing to educate the students on the danger of the game; (3) allowing students to play the game on school premises; and (4) failing to enforce procedures designed to limit violent acts such as the game in question. Notably, the plaintiff alleged that the school had knowledge that students had engaged in this game previously. Despite pleading general notice of the activity, the court affirmed the motion to dismiss on the basis that the plaintiff failed to plead specific facts demonstrating that the defendant knew what the game entailed and importantly that this student was going to engage in this specific activity on the date in question. Brooks v. McLean County Unit Dist. No. 5, 2014 IL App (4th) 130503.
No Duty for Municipality to Maintain Pothole Located Outside of Crosswalk that Caused Plaintiff Located Partially within Crosswalk to Stumble Municipal defendants have long known the rule that there is no duty to maintain the street for pedestrians outside of the physical boundaries of a crosswalk. In Swain v. City of Chicago, however, the issue was whether a pedestrian walking at least partially in a
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crosswalk, who allegedly tripped on a pothole located next to—but entirely outside of that crosswalk—could maintain a cause of action. Initially, a motion for summary judgment was brought by the defendants on the basis of immunity under Section 3-102 of the Local Governmental and Government Employees Tort Immunity Act, 745 ILCS 10/3-102, that the plaintiff was not an intended and permitted user of the street where the pothole was located. This motion was denied by the motion judge on the basis that an issue of material fact existed as to whether under Section 3-102 the plaintiff was an intended and permitted user of the crosswalk in question. Upon being assigned to a trial judge, an oral motion for “directed finding” was brought by the defendant on the basis that under Section 3-102 there was no duty to fix the pothole, as the plaintiff was not an intended and permitted user of the street where the pothole existed. The trial court agreed, and granted the oral motion for a “directed finding.” The Illinois Appellate Court First District affirmed, although finding that the oral motion for “directed finding” was more appropriately a motion to reconsider the previous motion for summary judgment. Notably, the First District held that it was the location of the hazard, and not the location of the pedestrian, that controlled. As such, under Section 3-102, there was no duty to maintain the street for pedestrians outside of a crosswalk, even if the pedestrian injured was located at least partially within the crosswalk’s boundaries. Swain v. City of Chi., 2014 IL App (1st) 122769.
Motion to Dismiss Based on Discretionary Immunity Affirmed Despite No Supporting Affidavit In Malinksi v. Grayslake Community High School District 127, the Illinois Appellate Court Second District was confronted with a school bullying case, wherein the plaintiff had alleged numerous statements, calls, and meetings describing the amount of bullying a student was undergoing daily at school. After the student was physically assaulted outside of a classroom, the plaintiff brought suit against the school district. The school district brought a motion to dismiss under Section 2-619.1 of the Illinois Code of Civil Procedure, arguing that discretionary immunity totally immunized the district from any liability in how it maintained discipline within the school and in particular how it handled bullying. Notably, the
school district provided no affidavit or sworn testimony to support the motion. The Second District held that the plaintiff’s failure to specifically object to the discretionary immunity argument on the grounds that there was no supporting affidavit waived any argument that it was required to prove an affirmative defense or that discretionary immunity could not be proven from the face of the complaint. Malinksi v. Grayslake Cmty. High Sch. Dist. 127, 2014 IL App (2d) 130685.
Distraction Exception to the Open and Obvious Defense In Bruns v. City of Centralia, the Illinois Supreme Court held that a municipality has no duty to protect a plaintiff from an open and obvious sidewalk defect and that the mere fact that a plaintiff is looking elsewhere at the time of a fall does not trigger the “distraction exception” to the open and obvious doctrine. The plaintiff filed a negligence action against the City of Centralia, after she tripped and fell on an uneven sidewalk. The fall resulted from a crack in a sidewalk caused by tree roots. The plaintiff had noticed the crack on multiple occasions in the past and testified that she was sure she noticed it on the day of her fall. She testified that someone could not help but notice it.
On review, the Illinois Supreme Court noted that the only distraction identified by the plaintiff was that her attention was fixed on the door and steps of the clinic. . . . The court concluded that the mere fact of looking elsewhere does not constitute a distraction.
The plaintiff filed suit, alleging that Centralia negligently maintained the sidewalk, failed to inspect and repair the sidewalk, and permitted the sidewalk to remain in a dangerous condition. Centralia sought summary judgment, arguing that it was not required to foresee and protect against injuries resulting from an open and obvious condition. The plaintiff countered that the “distraction” exception to the open and obvious doctrine applied, because when she tripped, she was looking ahead at the door of the medical clinic
that was her destination. The trial court granted summary judgment for Centralia, finding that the defect was open and obvious and that Centralia was under no duty to protect the plaintiff from an open and obvious condition. In doing so, the court rejected the plaintiff’s distraction argument, noting that “the mere existence of an entrance, and/or steps leading up to it, would provide a universal distraction exception to the open and obvious doctrine.” On appeal, the parties agreed that the sidewalk defect was open and obvious as a matter of law, but disagreed as to whether the distraction exception applied. The Illinois Appellate Court Fifth District found the key question to be the foreseeability of the likelihood that an individual’s attention may be distracted from the open and obvious condition. Finding that it was reasonable to believe that an elderly patron of an eye clinic might have her attention focused on the pathway forward, instead of on the sidewalk ahead, the appellate panel reversed the summary judgment. On review, the Illinois Supreme Court noted that the only distraction identified by the plaintiff was that her attention was fixed on the door and steps of the clinic. Importantly, she did not produce evidence that (a) some circumstance required her to divert her attention from the defect or otherwise prevented her from avoiding it, or (b) that the purported distraction was reasonably foreseeable to the defendant. The court concluded that the mere fact of looking elsewhere does not constitute a distraction. The judgment of the appellate court was reversed, and the judgment of the trial court granting summary judgment to Centralia was affirmed. Bruns v. City of Centralia, 2014 IL 116998.
School Districts Unable to Ignore City Ordinances Gurba v. Community High School District No. 155 involved a dispute over the decision of the school district and the board of education to reconstruct bleachers at the athletic field of Crystal Lake South High School. The plaintiffs in the case were property owners whose land was adjacent to the football stadium. They alleged that the defendants’ decision to build bleachers violated the zoning and stormwater ordinances of the City of Crystal Lake (City) by being too big, too high, and too close to the property line. In deciding to reconstruct and relocate the bleachers in question, the board of education (Board) did not notify the City or comply with the City’s zoning ordinances of obtaining a variance or special-use permit. The trial court held that the school district must comply with the zoning ordinances of the City. The Illinois Appellate Court Second — Continued on next page
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Survey of 2014 Local Government Law Cases (Continued) District affirmed the trial court’s decision. On appeal, the Board first argued that, under the Illinois Constitution, the powers of the school district exceeded those of the home-rule authority of the City. The appellate court disagreed. After analyzing the plain language of the various constitutional provisions relating to school districts, public education, and homerule units, the Court concluded that there was clear support for the trial court’s determination that the Board was subject to the City’s zoning ordinances. The Court, citing Napleton v. Village of Hinsdale, 229 Ill. 2d 296, 310–11, 315 (2008), noted that the zoning provisions have long been held to be appropriate exercises of the home-rule unit’s power to regulate for the protection of public health, safety, morals, and welfare. As long as the City was not enacting ordinances that infringed upon the realm of public education, it was acting appropriately. The Board then made a statutory argument, stating that the School Code trumped the City’s zoning ordinances. The appellate court noted that the Illinois School Code, 105 ILCS 5/1–1, et seq., was largely devoid of any references to zoning. There was, however, language in the School Code that stated that zoning changes, variations, or special uses for property held or controlled by the school district could be sought. 105 ILCS 5/10-22.13a (West 2012). The appellate court interpreted this language as meaning that school districts must seek and obtain approval from home-rule units. With this interpretation, and the absence of anything in the School Code stating it could ignore zoning laws, the appellate court found that the zoning laws did apply to the school district. Although recognizing as an apparent issue of first impression the situation of whether local school boards and school districts are subject to land-use and zoning regulations of the municipality in which they reside, the Second District noted that courts had dealt with the issue of concurrent regulation between home-rule units in areas of statewide concern. Following the analysis pertaining to concurrent regulation, specifically City of Chicago v. StubHub, Inc., 2011 IL 111127, the Second District concluded that the analysis also supported a finding that the City may enforce its zoning regulations against the school district. Gurba v. Cmty. High Sch. Dist. No. 155, 2014 IL App (2d) 140098.
Family and Medical Leave Act and Las Vegas In Ballard v. Chicago Park District, the plaintiff alleged that she was terminated from the park district in violation of the Family and Medical Leave Act, 29 U.S.C. § 2601, et seq. The FMLA allows eligible employees 12 workweeks of leave “[i]n order to care for the spouse, or a son, daughter, or parent, of the employee, if such spouse, son, daughter, or parent has a serious health condition.” 29 U.S.C. § 2612. The plaintiff was terminated for unauthorized absences accumulated when she accompanied her terminally ill mother on a trip to Las Vegas. On a daily basis prior to the trip, the plaintiff cared for her mother, who was in hospice care. The plaintiff requested six weeks of unpaid FMLA leave from the park district to accompany her mother during the trip. The park district denied the request, but the plaintiff reported that she was not informed of the denial prior to the trip. The plaintiff cared for her mother during the trip. At the trial court level, the park district moved for summary judgment, asserting that the plaintiff did not “care for” her mother in Las Vegas because she was already providing her with care at home and because the trip was not related to a continuing course of medical treatment. The district court denied the employer’s motion and pointed out that where the “care” takes place has no bearing on whether the employee receives FMLA protections, so long as the employee provides care to the family member. The park district appealed and lost again when the U.S. Court of Appeals for the Seventh Circuit affirmed. The Seventh Circuit rejected the park district’s position that distinguished “care” from “treatment.” The court held that there is no such distinction in the relevant provision of the statute. Further, the statute does not restrict where the care is being provided. The only statutory requirement is that the plaintiff “care for” a terminally ill parent to be entitled to FMLA leave. Because the plaintiff did “care for” her terminally ill mother during the trip to Las Vegas, she was protected by the FMLA. Ballard v. Chi. Park Dist., 741 F.3d 838 (7th Cir. 2014).
Police Can Rely on Co-Tenant Consent for Search In Fernandez v. California, the U.S. Supreme Court held in favor of police in a case that will make it easier for police to search a dwelling without a warrant. The Court found that police can search a home without a warrant, even if a suspect had previously objected to the search, as long as he is no longer on the scene and a co-tenant gives consent.
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The plaintiff claimed that the search was unconstitutional and the evidence found during the search (including firearms and gang paraphernalia) should not have been admitted at his trial. He was sentenced to 14 years in prison for robbery. The Supreme Court, however, found that the written consent form signed by the plaintiff’s co-tenant made the search legitimate. The Court noted that to rule otherwise would have created a situation where lawful occupants would have been prevented from inviting the police into their homes to conduct searches. Fernandez v. California, 134 S. Ct. 1126 (2014).
No Court Ordered Relief Necessary in First District for Award of Attorneys’ Fees in FOIA Case The Illinois Appellate Court First District in Uptown People’s Law Center v. Department of Corrections rejected the Second District’s interpretation of the “prevailing party” provision under FOIA that had required the plaintiff to win a court order as a prerequisite for an award of attorneys’ fees. The plaintiff requested certain documents from the Illinois Department of Corrections (IDOC) under the Freedom of Information Act (FOIA), 5 ILCS 140/1, et seq. The plaintiff then sued, claiming that IDOC failed to turn over the records. During the lawsuit, IDOC produced the documents to Uptown People’s Law Center (Uptown). Uptown then filed a petition for attorneys’ fees under Section 11(i) of FOIA, 5 ILCS 140/11(i), which provides that a “prevailing party” is entitled to an award of attorneys’ fees. IDOC, however, argued that Uptown had not prevailed because IDOC turned over the records before a court issued an order compelling it to do so. The trial court agreed with IDOC and denied fees to Uptown by relying on a Second District case, Rock River Times v. Rockford Public School District, 2012 IL App (2d) 110879. The court in Rock River Times held that the “prevailing party” language of FOIA applied only where the plaintiff won via a court order, but not if the public body voluntarily turned over the records during litigation. The First District found that that Second District “wrongly decided” that case. According to the First District, “prevails” does not require judicial relief. Uptown People’s Law Ctr. v. Dept. of Corrections, 2014 IL App (1st) 130161.
Open and Obvious Water Condition Leads to Death and Dismissal of Case In Suchy v. City of Geneva, the plaintiff’s decedent died after he jumped into a river to save a boy drowning in the downstream current of a dam. Although the decedent saved the boy’s life, the decedent was injured in the rescue and later died of his injuries. The plaintiff failed to adequately plead that danger was other than open and obvious and did not plead that dangers were not apparent from the surface or were concealed or latent. The appellate court affirmed that risks presented by the dam and the river were those risks inherent in bodies of water and dams. The appellate court held that the trial court properly found that the city, county, and park district owed decedent no duty to warn of or protect against risks presented by the river and the dam. Suchy v. City of Geneva, 2014 IL App (2d) 130367.
No Extra Charges for Electronic Response to FOIA Request In Sage Information Services v. Suhr, the Illinois Appellate Court Second District held that the supervisor of assessments was required to provide an electronic copy of the current real property assessment record file for the entire county and, pursuant to Section 6(a) of the Freedom of Information Act (FOIA), 5 ILCS 140/6, may not charge more than the cost of purchasing the recording medium for the requested electronic records. In this case, the defendant relied upon Section 9-20 of the Property Tax Code, 35 ILCS 200/9-20, to demand that the plaintiff would have to pay $6,290.45 to obtain the records. The trial court, however, held in favor of the plaintiff and required production of the requested records in electronic format. Further, relying on Sage Information Services v. Humm, 2012 IL App (5th) 110580, the trial court ordered that the defendant could only charge the plaintiff no more than the cost of purchasing the recording medium (e.g., compact disc) as required in Section 6(a) of FOIA (known as the “costonly” rule). The defendant’s position was that Humm was wrongly decided and so should be overturned. After allowing the defendant to make some interesting but overly intricate arguments, the appellate court affirmed the trial court’s ruling in favor of the plaintiff. Sage Info. Servs. v. Suhr, 2014 IL App (2d) 130708.
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Survey of 2014 Local Government Law Cases (Continued)
Kendall County State’s Attorney Is a “Public Body” Subject to FOIA The Kendall County State’s Attorney’s office denied various requests made by a reporter under the Freedom of Information Act (FOIA), 5 ILCS 140/1, et seq., on the grounds that the state’s attorney’s office is part of the judicial branch of government and is, therefore, exempt from FOIA. The trial and appellate courts agreed. The Illinois Supreme Court, however, reversed, holding that a state’s attorney’s office is a “public body” under FOIA. Although the supreme court acknowledged that FOIA does not include the judicial branch or judiciary, the court determined that a state’s attorney’s office is not part of either the judiciary or the judicial branch of government. Instead, the court concluded that the office of state’s attorney is part of the executive branch of state government, which falls squarely within the definition of “public body” under FOIA. As the court bluntly put it: “The FOIA applies to the office of State’s Attorney.” Nelson v. Kendall County, 2014 IL 116303.
Village Can Enforce Administrative Adjudication Order in Court In Village of Lake in the Hills v. Niklaus, the village established a system of administrative adjudication pursuant to Division 2.1 of the Illinois Municipal Code. The village’s hearing officer found the defendant liable for various municipal ordinance violations and assessed fines against the defendant. The village then sought to enforce the hearing officer’s orders in the circuit court. The circuit court denied the village’s petitions by holding that it did not have the statutory authority in either the Municipal Code or the Code of Civil Procedure to enforce the hearing officer’s orders in the circuit court. The appellate court reversed, however, based on the plain reading of Section 1-2.1-8 of the Municipal Code, 65 ILCS 5/1–2.1–8. Subsection (b) of Section 1-2.1-8, labeled “Enforcement of judgment,” specifically states that “the findings, decision, and order of the hearing officer may be enforced in the same manner as a judgment entered by a court of competent jurisdiction.” 65 ILCS 5/1–2.1–8(b) In sum, the process that the village used to enforce the hearing officer’s orders—filing petitions to enforce the hearing officer’s orders with the circuit court, accompanied by certified copies of the administrative orders—was proper. As a result, the appellate court reversed the circuit court’s decision, finding that a home rule municipality has authority to enforce hearing officer decisions in the circuit court. Vill. of Lake in the Hills v. Niklaus, 2014 IL App (2d) 130654. 56 | IDC 2014 SURVEY OF LAW
CTA and Its Bus Driver Overcome Presumption of Common Carrier Negligence where Standing Passengers Were Injured During Sudden Stop In Carlson v. Chicago Transit Authority, the Illinois Appellate Court First District affirmed summary judgment in favor of the CTA and its bus driver in a personal injury suit. Two plaintiffs, who were standing bus passengers, alleged negligence and sought damages for injuries they allegedly sustained when they fell down in the aisle when the driver abruptly slammed the brakes. Videotape of the incident and depositions of the bus driver and eyewitnesses established that the reason the driver applied the brakes was to avoid colliding with a car that had cut in front of the bus. The trial court applied the heightened obligation of a common carrier to do all that human care, vigilance, and foresight could reasonably do to convey its passengers in safety to their destination. The trial court also acknowledged that the happening of an accident to a passenger during the course of his transportation by a common carrier raises a rebuttable presumption that the carrier was negligent. The trial court granted summary judgment, finding that the presumption was successfully rebutted—the carrier may rebut the presumption by proving that the accident resulted from a cause for which the carrier should not be held responsible. The evidence explained why the driver had to brake hard and that it resulted from a cause for which defendants should not be held responsible. On appeal, the plaintiffs argued that, given the presumption of negligence and the highest degree of care owed to the plaintiffs, there clearly was a genuine issue of material fact regarding whether the defendants were negligent. The plaintiffs argued that the question of whether the driver was negligent by overreacting to a vehicle darting into his lane and by applying his brakes in such a hard and sudden manner was a question of fact for a jury and should not have been decided as a matter of law. The appellate court found that no genuine issue of material fact existed because no evidence supported the plaintiffs’ assertion that the defendants breached the duty owed to the plaintiffs. “[R]easonable minds could not conclude that immediately braking to avoid an imminent collision with a suddenly darting vehicle was an unreasonable thing to do” and “it is sheer speculation by the plaintiffs to suggest they would not have fallen if [the driver] could have braked less hard.” Carlson v. Chi. Transit Auth., 2014 IL App (1st) 122463.
About the Authors James L. Craney is a partner in the Madison County office of Lewis Brisbois Bisgaard & Smith LLP, where his practice focuses upon general liability litigation. During his career, he has defended numerous governmental entities in actions ranging from employment discrimination and wrongful termination to civil rights violation and personal injury. He earned his B.S. from the University of Illinois in Champaign-Urbana and his M.S. from Southern Illinois in Carbondale. Mr. Craney earned his J.D. from St. Louis University, where he also obtained the program’s Health Law Certificate. He is a member of the IDC Employment Law and Local Government Law committees, and is a regular speaker before bar association and industry groups.
nance violations, “sunshine laws” compliance, internet defamation, and complex litigation. He has been selected for inclusion in Illinois Super Lawyers® for 2012 and 2013 and in Illinois Super Lawyers Rising Stars® from 2008–2011. He has also been recognized as a “Leading Lawyer” by the Leading Lawyers® Network. He has received the Illinois Association of Defense Trial Counsel’s President’s Award and also the Meritorious Service Award for his outstanding service as co-chair of the IDC Commercial Litigation Committee. He is the Chair of the IDC’s Local Governmental Law Committee. John is co-author of the Municipal Litigation chapter of the Illinois Municipal Law Series and co-author of the Park District chapter of Illinois Special District Series published by the Illinois Institute for Continuing Legal Education.
LOCAL GOVERNMENT law committee
Dustin S. Fisher is an associate at Judge, James & Kujawa, LLC. Mr. Fisher concentrates his practice on civil litigation defense and has successfully defended municipalities, school districts, park districts, housing authorities, and railroads in a wide variety of cases including premises liability, sexual abuse defense, section 1983 actions, FELA, defamation, administrative reviews, and insurance coverage. Howard L. Huntington is a partner at Bullaro & Carton, P.C. in Chicago. He focuses his practice on construction, product liability, commercial, business, public entity, civil rights, and transportation litigation. He has defended a wide variety of high-stakes matters in Illinois and Indiana. He serves on the IDC Local Government Committee and is a member of various other associations, including Defense Trial Counsel of Indiana. Mr. Huntington has defended municipalities and public entities in Title VII discrimination cases, Section 1983 public employee cases, employment contract, and other matters in both Illinois and Indiana. He received a B.A. in political science from the University of Illinois at Urbana-Champaign and his J.D. from Chicago-Kent College of Law. He is AV rated by Martindale-Hubbell. Andrew R. Makauskas is a partner with the law firm of Brady, Connolly & Masuda, P.C., in its Chicago office. He has been representing corporations and insurance carriers in civil litigation since 1991. He appears regularly before the circuit courts, federal courts, and the Illinois Workers’ Compensation Commission. Mr. Makauskas has made numerous presentations to clients and to the insurance industry. He received his B.A. from the University of Michigan in 1988 and his J.D. from the University of Illinois College of Law in 1991. John M. O’Driscoll is a partner based out of Tressler LLP’s Bolingbrook and Chicago offices. His practice includes representing companies and individuals in business disagreements and providing general counsel services to local governmental bodies such as municipalities, school districts, library districts and park districts. Mr. O’Driscoll handles day-to-day government operations issues as well as a wide variety of areas such as business litigation, breaches of contract, construction issues, employment disputes, ordi-
John M. O’Driscoll, Chair Tressler LLP, Bolingbrook 630-759-0800
[email protected]
Dustin S. Fisher, Vice Chair Judge, James & Kujawa, LLC, Park Ridge 847-292-1200
[email protected]
MEMBERS
Elizabeth K. Barton Ancel Glink Diamond Bush DiCianni
& Krafthefer
James L. Craney
Lewis Brisbois Bisgaard & Smith LLP
Howard L. Huntington Bullaro & Carton, P.C. Benjamin M. Jacobi O’Halloran Kosoff Geitner & Cook, LLC Peter R. Jennetten Quinn, Johnston, Henderson,
Pretorius & Cerulo
Andrew R. Makauskas Brady, Connolly & Masuda, PC James W. Ozog Goldberg Segalla LLP Leah Selinger Purcell & Wardrope Chartered Michael J. Victor O’Halloran Kosoff Geitner & Cook, LLC
IDC 2014 SURVEY OF LAW | 57
Survey of
Tort Law Cases
Fee Sharing Agreement that Does Not Strictly Comply with the Rules of Professional Conduct Is Unenforceable In Donald W. Fohrman & Associates, Ltd. v. Marc D. Alberts, Donald W. Fohrman was an Illinois attorney who specialized in workers’ compensation litigation. Fohrman entered into an oral referral fee agreement with Marc Alberts, an Illinois attorney who concentrated his practice in plaintiff’s personal injury litigation. Pursuant to the alleged agreement, Fohrman would refer any personal injury cases he received to Alberts, and Alberts, in turn, would remit 50% of any fees he recovered in those personal injury cases to Fohrman. This arrangement worked well for a while, but eventually Fohrman realized that Alberts had stopped remitting the orally agreed upon referral fees. Fohrman filed suit against Alberts, alleging claims for breach of fiduciary duty, accounting, breach of contract, and fraud. In support of the complaint, Fohrman attached copies of various attorney-client agreements allegedly executed by clients that were referred to Alberts. The trial court dismissed the original complaint and gave Fohrman leave to file an amended complaint. Fohrman filed an amended complaint containing counts for breach of fiduciary duty, accounting, fraud, unjust enrichment, promissory estoppel, and tortious interference with a prospective economic advantage. The amended complaint also contained copies of various attorney-client agreements that allegedly were executed by or provided to clients who were referred to Alberts. The amended complaint did not allege that Fohrman had assumed joint financial responsibility for the referred cases, did not allege that Fohrman performed any work on the referred cases, and did not allege that clients actually knew or were told that fees were to be equally shared. The trial court ultimately dismissed Fohrman’s amended complaint, finding that Fohrman’s oral agreement with Alberts failed to comply with Rule 1.5(e) of the Illinois Rules of Professional Conduct. Fohrman filed an appeal of the dismissal of his claims, arguing that he substantially complied with the applicable rules regarding fee-sharing agreements and that he should, therefore, be entitled to his share of the fees generated by Alberts. On appeal, the appellate court noted that Illinois Rule of Professional Conduct 1.5(e) applies to agreements for the division of fees between lawyers who are not in the same firm. Rule 1.5(e) states 58 | IDC 2014 SURVEY OF LAW
that a division of fees may be made between lawyers who are not in the same firm only if (1) the division is in proportion to the services performed by each lawyer and each lawyer assumes joint financial responsibility for the representation; (2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (3) the total fee is reasonable. According to the appellate court, the Rules of Professional Conduct have the force of law. As a result, strict compliance with the rules is required for any claim seeking fees under a fee-sharing agreement. Because the attorney-client agreements attached to Fohrman’s second amended complaint failed to inform the clients of the proposed fee-sharing arrangement, failed to detail the exact split in fees, and failed to assert that the attorneys had assumed equal financial responsibility for the referred matters, the appellate court found that the agreements failed to strictly comply with the requirements of Rule 1.5(e) and affirmed the dismissal of the plaintiff’s second amended complaint at law. Donald W. Fohrman & Assocs., Ltd. v. Marc D. Alberts, 2014 IL App (1st) 123351.
Failed Real Estate Investor Fails to Succeed on Legal Malpractice and Unjust Enrichment Claims In Blythe Holdings, Inc. v. DeAngelis, Stephanie Hill formed Blythe Holdings, Incorporated (Blythe), to pursue the acquisition of hundreds of vacant lots located in Chicago’s 16th Ward. In the fall of 2005, Blythe entered into a representation agreement with attorney John DeAngelis, who agreed to provide legal and consulting services in connection with Blythe’s acquisition of the lots. At the time, DeAngelis was employed by the law firm Brown Udell. He drafted the Blythe retainer agreement on Brown Udell letterhead, but he never informed the firm that he was representing Blythe. On December 1, 2005, Blythe paid DeAngelis a $25,000 retainer fee per the terms of the agreement. The check was made payable to “John A. DeAngelis, Esq.” and was deposited by DeAngelis into his own client fund account at the Northern Trust Company. DeAngelis never notified anyone at Brown Udell that he had received a retainer check from Blythe and never shared any portion of the fees he received from Blythe with Brown Udell.
On May 12, 2006, in an effort to obtain vacant lots, DeAngelis submitted an Application for Purchase of Redevelopment Project Area Property to the City of Chicago’s Department of Planning and Development on behalf of Blythe. Michelle Nolan, a project manager for the Department of Planning and Development reviewed the application and, although it contained multiple errors, she was prepared to proceed with the application. In June of 2006, Nolan wrote to Stephanie Hill and informed her that Blythe still needed to submit several items in order to move forward with the application. She outlined the steps that Blythe needed to take before the application process would be complete, including gaining approvals from the Chicago Development Commission and the City Council. On June 23, 2006, DeAngelis wrote to Blythe, stating that he needed input from the company to complete the application. He never received a response from Blythe. Blythe filed suit against DeAngelis and his former firm, Brown Udell, claiming legal malpractice on the part of both defendants and unjust enrichment on the part of Brown Udell. The defendants filed a motion for summary on all counts, which the district court granted. Blythe then filed an appeal. The U.S. Court of Appeals for the Seventh Circuit affirmed the entry of summary judgment in favor of both defendants. In doing so, it found that the plaintiff would not be able to prevail on its legal malpractice claims because it was unable to prove that DeAngelis’s claimed malpractice foreclosed its ability to obtain the vacant lots in question or that ultimately it would have been successful in acquiring the property. In regard to the unjust enrichment claim, the Seventh Circuit held that the undisputed evidence supported a finding that Brown Udell never knew about nor received any portion of the funds that were paid by Blythe to John DeAngelis. Accordingly, because Brown Udell never received any funds from Blythe, no unjust enrichment occurred. Blythe Holdings, Inc. v. DeAngelis, 750 F.3d 653 (7th Cir. 2014).
Premises Liability First District Finds Business Invitors Do Not Have a Duty to Protect Business Invitees from Criminal Activity that Does Not Involve Physical Harm In Lewis v. Heartland Food Corp., the plaintiff brought a cause of action against Heartland Food Corp. after his iPhone was stolen by other patrons while he was dining at a Burger King restaurant in Chicago. The plaintiff claimed that Heartland Food Corp. was
negligent and breached its duties because it did not have security guards to protect him against the theft of his iPhone. The trial court granted the defendant’s motion to dismiss, and the plaintiff appealed. The Illinois Appellate Court First District found that Illinois had adopted Section 344 of the Restatement (Second) of Torts, which recognized a duty of business invitors to protect business invitees from physical harm caused by third parties. There were not any Illinois cases, however, that had extended this duty to protect business invitees from criminal activity that did not involve physical harm. The appellate court affirmed the circuit court’s dismissal of the plaintiff’s case. Lewis v. Heartland Food Corp., 2014 IL App (1st) 123303.
Century 21 Not Liable for Injuries Potential Home Buyer Sustained when a Basement Staircase Collapsed During a Home Showing In Hart v. Century 21 Windsor Realty, the Illinois Appellate Court Third District held that a defendant real estate agency was not liable for injuries the plaintiff sustained after having fallen down steps while being shown a house that was for sale. The plaintiff was being shown a house subject to a listing agreement between Century 21 Windsor Realty (Century 21) and the property owner. During the showing, a basement stairway collapsed, and the plaintiff was injured. The plaintiff brought a multi-count complaint against many defendants, including Century 21, the owner’s real estate agent. Century 21 argued that it did not have a duty to inspect the property for safety hazards, in part because the property owner, Fannie Mae, delegated this duty through a contract with a property preservation company. The property preservation company was supposed to clean, inspect, and repair the property. In contrast, the broker sign-off documents showed that Century 21 was supposed to clean and wipe down ceiling fan blades, sinks, appliances, floors, walls, baseboards, light fixtures, and windows. The trial court, citing the master listing agreement, found that Century 21 did not have a contractual duty to inspect the basement stairs for safety hazards and granted summary judgment in favor of Century 21. The appellate court, when it examined the master listing agreement, found that Century 21 only had a duty to ensure the health and safety of the parties listed in the agreement. The only parties listed in the agreement were the broker, the broker’s personnel, and vendors. Because the plaintiff was not covered under any of these categories, the appellate court found that Century 21 did not have a contractual duty to protect him from unsafe hazards. The Illinois Appellate Court — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) Third District rejected the plaintiff’s arguments that Century 21 had a proprietary interest in the property because it had contracted to inspect the property to protect the safety interests of the broker, the broker’s personnel, and vendors. The Third District again turned to the master listing agreement and found that the parties specifically agreed that Century 21 did not acquire a proprietary interest in the property by virtue of the contract. The Third District affirmed the trial court’s judgment in favor of Century 21. Hart v. Century 21 Windsor Realty, 2014 IL App (3d) 130667.
Second District Affirmed Summary Judgment in Favor of Hotel because under the De Minimis Rule, Hotel Owed No Duty to Guest to Repair Slight Variation in Height between Sidewalk Slabs In St. Martin v. First Hospitality Group, Inc., the plaintiff alleged that he tripped and fell over an uneven sidewalk as he approached the entrance to a hotel. The plaintiff was attending a seminar at the hotel and stepped outside to smoke a cigarette. When he returned to come back in, he tripped and fell over uneven slabs of concrete that were a couple of feet away from the hotel entrance. The defendant’s expert witness measured the height difference between the concrete slabs and found that it was just under an inch. The expert also opined that the concrete slabs would heave and move in the winter and that differences such as the one in this case were typical, commonplace, and expected. The Illinois Appellate Court Second District, while finding that there was not a set standard for applying a de minimis rule to sidewalk variations, found that courts typically consider sidewalk variations of less than two inches to be de minimis. The Second District found that, given the extreme weather conditions in Illinois, it was expected that there would be slight variations in sidewalk heights and that sidewalks could not be maintained at all times. The Second District, when affirming the trial court’s grant of summary judgment based on the de minimis rule, also noted that the plaintiff had failed to present any expert evidence that the sidewalk needed to be replaced or maintained. St. Martin v. First Hospitality Grp., Inc., 2014 IL App (2d) 130505.
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Plaintiff’s Lawsuit Based on Injuries She Sustained from a Trip and Fall on Ice Was Barred by the Snow and Ice Removal Act In Ryan v. Glen Ellyn Raintree Condominium Association, the plaintiff brought suit after having slipped and fallen on ice outside of the entrance to a condominium building that she claimed accumulated because of a design defect in the overhead awning that caused a water drip, and further, because defendants were voluntarily removing the snow and ice, but missed the patch that caused her fall. The Illinois Snow and Ice Removal Act, 745 ILCS 75/1, et seq., protects landowners from injuries caused by: (a) natural accumulations of snow and ice; and (b) liability for injuries resulting from a residential property owner’s acts or omissions in attempting to remove snow or ice from sidewalks abutting the property, unless the alleged misconduct was willful or wanton. The Illinois Appellate Court Second District rejected the plaintiff’s theory that the Snow and Ice Removal Act did not apply because the ice was caused by a design defect in the awning. The court found that the Act applied because the plaintiff was arguing that the defendants were negligent in failing to remove the patch of ice that caused her to fall. The appellate court affirmed the trial court’s grant of summary judgment in favor of the defendant and held that the plaintiff’s cause of action was barred based on the Snow and Ice Removal Act. Ryan v. Glen Ellyn Raintree Condo. Ass’n, 2014 IL App (2d) 130682.
Defendant Homeowner Is Not Liable for Injuries to a Guest without Evidence of a Defect in the Stairs that Caused the Guest to Fall In Vertin v. Mau, the plaintiff slipped and fell down steps while a guest at the defendant’s home. She brought suit against the defendant, claiming that he failed to maintain the steps that caused her injuries. In her deposition, the plaintiff testified that she stepped down from the second step and fell. She did not know why she fell. She also testified she had been up and down the same steps many times and had fallen a couple of weeks before this incident. The plaintiff’s expert provided an affidavit showing that the defendant’s steps had many violations that were prohibited by building codes and that were considered dangerous by stairway safety experts. The court found that there were not any witnesses to the plaintiff’s fall, and although the defendant’s steps may have been unsafe, there was no evidence of any conditions claimed by
the plaintiff’s expert to be unsafe being the cause of the plaintiff’s fall. The appellate court affirmed the trial court’s grant of summary judgment, because there was no evidence as to the proximate cause of the plaintiff’s fall. Vertin v. Mau, 2014 IL App (3d) 130246.
Illinois Supreme Court Holds Looking Elsewhere Is Not a Distraction under the Distraction Exception to the Open and Obvious Condition Rule The Illinois Supreme Court in Bruns v. City of Centralia held that looking elsewhere is not a distraction under the distraction exception to the open and obvious condition rule. The Bruns decision is a well-reasoned decision that provides two excellent results for Illinois property owners. First, it narrows the instances in which the “distraction exception” can be applied. Second, the decision clarifies that, for the distraction exception to apply, the property owners must create the distraction and that self-made distractions are not actionable. Affirming the judgment of the trial court that granted summary judgment to the City of Centralia, the Illinois Supreme Court considered whether the City of Centralia was liable for injuries the plaintiff sustained after tripping and falling on an uneven sidewalk. The open and obvious rule protects owners and possessors of land against claims that result from potentially dangerous conditions that are “open and obvious.” The Restatement (Second) of Torts (1965) defines “obvious” as meaning “both the condition and the risk are apparent to and would be recognized by a reasonable man, in the position of the visitor, exercising ordinary perception, intelligence and judgment.” Examples of open and obvious conditions include: fire, height, bodies of water, sidewalk defects, parking lot holes, and power lines. Illinois recognizes two exceptions to the open and obvious condition rule. The first exception—which is known as the “distraction exception”—applies “where the possessor [of land] has reason to expect that the invitee’s attention may be distracted, so that he will not discover what is obvious, or will forget what he has discovered, or fail to protect himself against it.” The second exception, which is known as the “deliberate encounter” exception, applies where “the possessor of land has reason to expect that the invitee will proceed to encounter the known or obvious danger because to a reasonable man in his position the advantage of doing so would outweigh the apparent risk.” In Bruns, the plaintiff drove to an eye clinic for a scheduled appointment. The plaintiff had been to this eye clinic at least nine
times before in the three months prior to this appointment. The plaintiff, as she had done for her other appointments, chose to park her car on the street in front of the clinic instead of using the clinic’s parking lot. The plaintiff then stubbed her toe on a crack in the sidewalk, fell, and injured her arm, leg, and knee while walking to the clinic entrance. The plaintiff testified that she was looking towards the clinic door and steps when she fell. The plaintiff also testified that she had noticed the sidewalk crack each time she went to the clinic and also noticed it on the date she fell. The parties agreed that the crack had been in the sidewalk for several years and had been caused by roots growing from a nearby tree. In fact, the City of Centralia had been contacted at least twice, by clinic employees, about the sidewalk crack. The clinic had even offered to remove the tree at its own expense. The City of Centralia refused to have the tree removed because the tree was 100 years old and considered “historically significant.”
Reversing the Fifth District, the Illinois Supreme Court held that, for the distraction exception to apply to the open and obvious condition rule, there must be evidence that the plaintiff was actually distracted. Here, the only evidence that the plaintiff was distracted was the plaintiff’s testimony that she was looking at the door and the steps of the clinic instead of the crack in the sidewalk.
The plaintiff sued the City of Centralia under various theories of negligence for not maintaining the sidewalk and allowing the sidewalk to remain in a dangerous condition. The City of Centralia argued that it was not liable to the plaintiff because the sidewalk crack was an open and obvious condition. The plaintiff agreed that the sidewalk crack was open and obvious, but argued that the distraction exception applied, allowing her to recover against the city. The plaintiff claimed that she was distracted because she was looking — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) up at the clinic door and steps. The trial court granted summary judgment in favor of the City of Centralia, finding that “the mere existence of an entrance, and/or steps leading up to it, would provide a universal distraction exception to the open and obvious doctrine.” The Illinois Appellate Court Fifth District reversed, concluding that it was reasonably foreseeable that an elderly person (the plaintiff was 79 years old at the time of the accident) walking to an eye clinic may be focused on the pathway and steps to the clinic and not the ground underfoot. Reversing the Fifth District, the Illinois Supreme Court held that, for the distraction exception to apply to the open and obvious condition rule, there must be evidence that the plaintiff was actually distracted. Here, the only evidence that the plaintiff was distracted was the plaintiff’s testimony that she was looking at the door and the steps of the clinic instead of the crack in the sidewalk. The court noted that, in other cases where the distraction exception had been applied, some evidence existed that something else was present that prevented the plaintiff from appreciating what otherwise would have been an open and obvious risk. Courts had applied the distraction exception when there was evidence showing that something was blocking the plaintiff’s view, the plaintiff was looking in a different direction because of safety reasons, or the plaintiff was focused on carrying something for the defendants. The court noted that, in each case where the distraction exception had been applied, the distraction was reasonably foreseeable to the defendant. Here, the plaintiff conceded that the only distraction was that she was looking elsewhere and not at the ground. The court found that the distraction of looking elsewhere was a self-made distraction. There was nothing the City of Centralia did that caused the plaintiff to be focused on the clinic door and steps instead of the sidewalk crack. The court, after finding that the distraction exception did not apply to the open and obvious condition rule, continued with its duty factor analysis and found that the plaintiff’s fall was not reasonably foreseeable because the City of Centralia was not ordinarily required to foresee injuries from open and obvious conditions. It further found that the second duty factor—the likelihood of injury—should be given little weight because the plaintiff, having encountered a potentially dangerous condition, should have appreciated and avoided the risk. The court further found that—for the third and fourth duty factors, which are: (a) the magnitude of guarding against the injury and (b) the consequences of placing that burden on the defendant— the consequences of imposing a burden of repairing sidewalks on the City of Centralia was great because there were miles of sidewalk to maintain. For these reasons, the court reversed the appellate court and affirmed the trial court’s order granting summary judgment in favor of the City of Centralia. Bruns v. City of Centralia, 2014 IL 116998.
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Products Liability Design Defect In Kurz v. Stanley Works, the plaintiffs, an elderly wife and husband, sued, amongst others, the manufacturer of an automatic door, seeking damages for the plaintiff’s wife’s fall and broken hip suffered when the door allegedly malfunctioned at a surplus store. The plaintiffs brought claims sounding in strict and negligent product liability. Particularly relevant to the plaintiffs’ claims was their claim that a breakout switch in the door, which was responsible for permitting a user to safely push the door the wrong way, was defective. Following discovery—during which it was determined that the automatic door in question was manufactured in 1996—the manufacturer moved for summary judgment on two grounds, namely that the statute of repose barred the plaintiffs’ claims and that no genuine issue of material fact existed that the door was defective. The trial court agreed, finding that: (1) the statute of repose barred the strict liability claims; (2) even if the statute of repose did not bar the claims, the defendant was entitled to summary judgment because no competent evidence was presented by the plaintiffs to show that the product left the defendant’s control in an unreasonably dangerous condition; and (3) the plaintiffs’ negligence claims were all premised upon mere speculation for which the plaintiffs failed to present any evidence or expert opinion demonstrating the viability of the plaintiffs’ theory. On appeal, the Illinois Appellate Court Second District affirmed in part and reversed in part. Specifically, the court held that the statute of repose did not bar the strict liability claims, but further held that the plaintiffs failed to adduce any competent evidence that the defendant’s product was defective. In reversing the trial court’s holding regarding the statute of repose, the Second District focused on 735 ILCS 5/13-213(e), which states: Replacement of a component part of a product unit with a substitute part having the same formula or design as the original part shall not be deemed a sale, lease or delivery . . . for purposes of permitting a commencement of a product liability action based on the doctrine of strict liability in tort to recover for injury or damage claimed to have resulted from the formula or design of such product unit or of the substitute part when such action would otherwise be barred [by Section 13-213(b)].
The court reached this decision despite section (b) reading: No product liability action based on the doctrine of strict liability in tort shall be commenced except within the applicable limitations period and, in any event, within 12 years from the date of first sale, lease or delivery . . . of any product unit that is claimed to have damaged the plaintiff. 735 ILCS 5/13-213(b). Although likely technically correct in its overall ruling (because the allegedly defective breakout switch was not 12 years old), the court found that Section 13-213(e) foreclosed the opportunity to dismiss a manufacturing defect claim, which is inconsistent with Section 13-213(b), which prohibits any product liability claim, including those sounding in manufacturing defect or a failure to warn. In affirming the trial court’s order granting summary judgment on the other claims for failure to present competent evidence, the Second District did not find compelling the plaintiffs’ argument that circumstantial evidence existed that the breakout switch did not operate properly. Relying on the Illinois Appellate Court First District’s holding in Foreman v. Gunite Corp., 2012 IL App (1st) 091644, ¶ 15, the court noted that circumstantial evidence is sufficient proof so long as the circumstances are such that the conclusion is the only probable, and not merely possible, one that may be drawn. Here, however, the plaintiffs failed to present any evidence that a defect was the only probable conclusion. Kurz v. Stanley Works, 2014 IL App (2d) 121429-U.
Design Defect—Failure to Warn In Stone v. Mitek Industries, Inc., the plaintiff, a floor worker for Central Illinois Truss, Inc. (CIT) at a truss manufacturing plant, claimed that he was injured by a machine used in the truss-manufacturing process, due to a defective safety bar system on the machine. The product in issue was a “RoofGlider,” a machine designed to slowly roll over wooden trusses, thereby helping firm up the truss after metal plates were hammered into place. To operate the RoofGlider, an operator uses a joystick to move the RoofGlider over the trusses at a speed of approximately 1.5 to 2.2 miles per hour. Attached to the front of the RoofGlider is a push bar safety system, which enables a worker in the path of the machine to stop the machine. During trial, the following facts were adduced: (1) the plaintiff was working on the floor in a restricted zone in which he should not have been working at the time of his accident; (2) the operator of the machine was not paying attention while he was operating the machine; (3) the safety bar for the machine was a “visible safety
issue” and was in “poor condition”; (4) the shop’s maintenance man was told repeatedly that the safety bar needed attention; (5) the safety bar was and had been held in place by duct tape for months; and (6) everyone at the plaintiff’s employer’s shop knew that the screws were loose and needed attention. Despite these admissions, the jury found and the Illinois Appellate Court Third District upheld a more than $13 million verdict in the plaintiff’s favor and moreover found that the plaintiff was not at all negligent for the accident. In reaching that conclusion, the Third District found that, “[a]lthough there is evidence suggesting that negligent acts by [the plaintiff’s employer’s] employees may have contributed to the accident, there is sufficient evidence to support the jury’s verdict that the defective condition of the RoofGlider was a proximate cause of Stone’s injury.” In support of that decision, the court found that the evidence showed that, due to the manner in which the machine was intended to be used, the screws in the safety arm were prone to loosen and that the defendant failed to provide any warning of this risk or the need to frequently inspect and tighten the screws. The court further rejected the defendant’s argument that the plaintiff assumed the risk by continuing to work in the restricted area, finding that the plaintiff was not aware of the specific defect and could not knowingly assume the risk. Justice Schmidt lodged a strong dissent to the majority’s holding, writing that “[t]he injury was the product of the ‘perfect storm’ created by the negligence of CIT and its employees.” The dissent further offered that “[t]his verdict and the majority’s order effectively transform the manufacturer into the insurer of the safety of anyone who comes into contact with its machine.” Further chastising the majority’s holding as it related to the likelihood that the screws would become loose, the dissent wrote: “Every product with moving parts experiences vibrations during its ordinary use, even one that goes less than two miles an hour during operation. That bolts were used in the construction of the C-collar, or even that an injury occurred, does not equate to an unreasonably dangerous product.” Stone v. Mitek Indus., Inc., 2014 IL App (3d) 120122-U.
Assumption of Risk In Nesbitt v. National Muscle Car Association, the plaintiff, a professional race car driver, was injured when the car she was driving allegedly failed, causing the drive train to pierce the floor of the vehicle and come into contact with the plaintiff. The plaintiff alleged that the vehicle was defectively designed because it lacked a metal shield to guard the drive train. The defendants moved to dismiss, arguing that the plaintiff’s claims were barred based on the — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) release and waiver of liability that she signed. Reversing in part and affirming in part, the Illinois Appellate Court First District found that certain of the defendants were covered by the waiver, while one, the manufacturer of the vehicle, was not, because it was unclear whether it was a covered party under the waiver. As to the other defendants, the plaintiff argued, in part, that a genuine issue of material fact existed as to whether the danger that caused her injuries was ordinarily associated with drag racing. Rejecting that argument, the First District relied on Schlessman v. Henson, 83 Ill. 2d 82, 86 (1980), in which the Illinois Supreme Court found that an auto racer was barred from bringing a negligent design claim based on signing a waiver and release. Importantly, the court noted: While plaintiff averred that she had never heard of an incident in which a racecar’s components flew up into the driver’s compartment and did not associate that sort of danger with the sport of drag racing, the determination of whether an injury is within the scope of an exculpatory agreement turns on whether the plaintiff was given notice of the range of dangers of which she assumed the risk, and not on whether the plaintiff contemplated the precise occurrence that caused her injuries. Nesbitt v. Nat’l Muscle Car Ass’n, 2014 IL App (1st) 130522-U.
Merchant’s Exception In Chraca v. U.S. Battery Manufacturing Co., the plaintiff was injured when, while moving golf cart batteries, the strap that he was using broke. The plaintiff sued the supplier of the golf cart batteries, which also supplied the strap. The defendant supplier moved for dismissal based on the merchant’s exception, 735 ILCS 5/2-621, which allows a defendant supplier to seek dismissal by identifying the manufacturer of the allegedly defective product. Satisfying its obligation, the defendant identified the manufacturer of the strap, a Chinese company. The plaintiff thereafter filed an amended complaint and effectuated service on the Chinese company and, subsequently, obtained a default judgment. The plaintiff nevertheless objected to the defendant supplier’s dismissal, relying on affidavits from his counsel, other Chinese counsel, and a paralegal employed by the international process server. The trial court denied the plaintiff’s motion and an appeal followed. The Illinois Appellate Court First District reversed, finding that Illinois lacked personal jurisdiction against the Chinese manufacturer. It based this holding on materials presented by the plaintiff, which suggested that the manufacturer did not have a website accessible in the United States and was not registered to do business in
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Illinois or California. Most important to the First District, however, were two affidavits that purportedly showed that the foreign manufacturer did not place its product into the stream of commerce with the intent that it reach the United States, let alone Illinois. Though the plaintiff bore the burden to establish that personal jurisdiction did not exist, he offered no competent evidence, relying on affidavits from foreign attorneys, the plaintiff’s attorneys, and the defendant supplier’s affidavit used merely to identify the foreign manufacturer. Of particular concern, this holding effectively permits any plaintiff to obviate the merchant’s exception for foreign manufacturers by arguing that no personal jurisdiction exists without offering admissible evidence, which is a prerequisite were a party to seek to avoid the personal jurisdiction of the court. Chraca v. U.S. Battery Mfg. Co., 2014 IL App (1st) 132325.
Medical Malpractice Lost Chance of Survival Claim Should Have Survived Motion for Directed Verdict In Hemminger v. LeMay, the plaintiff sued the defendant physician for failing to diagnose timely the plaintiff’s wife’s cervical cancer, thereby proximately causing her death by lessening her chance of survival. In June 2000, the decedent patient presented to the defendant obstetrician/gynecologist complaining of abdominal pain on her right side and recent spotting. The physician performed a pelvic exam which showed that the patient’s cervix was abnormally large and firm. The physician, however, did not order further testing. Six months later, the patient was diagnosed with cervical cancer, by which time the cancer was at Stage 3B, which has a five year survival rate of 32%. The patient ultimately died of metastatic cervical cancer in April 2002. The plaintiff husband alleged that, had the defendant physician ordered a cervical biopsy or a microscopic exam of the cervix, the cancer would have been discovered in June 2000 and his wife would have had a significantly better chance of survival. The case went to trial, and the plaintiff’s physician expert opined that, when the patient presented to the defendant physician in June 2000, the patient’s cervical cancer was either Stage 1 or Stage 2B. The five-year survival rate for women with Stage 1 cervical cancer is 80% to 90%, and the five-year survival rate for Stage 2B cervical cancer is 58%, while the survival rate for Stage 3B cervical cancer is 32%. The plaintiff’s expert conceded that many factors could affect a patient’s chances of surviving cervical cancer and admitted that she did not consider any of these factors in determining the patient’s chance for survival. The expert further testified that she
did not know how the patient would have responded to treatment if she would have been diagnosed sooner and did not know if the treatment that would have been prescribed earlier would have been any different from that which the patient received when the cancer was discovered. At the close of the plaintiff’s case, the court granted the defendant’s motion for directed verdict. The plaintiff appealed, and the appellate court reversed. The court noted that, under the lost chance of survival theory, a plaintiff may attempt to recover where a physician is alleged to have negligently deprived the patient of a chance to survive or to recover from a health condition where medical malpractice has lessened the effectiveness of treatment or increased the risk of an unfavorable outcome. In order to prevail on such a theory, the court explained, a plaintiff is not required to prove that she would have had a better than 50% chance of survival
The court held that the plaintiff was not required to prove that she would have had a greater than 50% chance of survival absent the alleged negligence. Rather, she simply had to present “some evidence” that the alleged negligence proximately caused an increased risk of harm or lost chance of recovery.
or recovery absent the alleged malpractice. Likewise, a plaintiff is not required to prove that a better outcome would have occurred absent the alleged negligence. In reviewing the testimony of the plaintiff’s expert, the court found that the plaintiff established a prima facie case for a lost chance of survival claim. The plaintiff provided some evidence that the deceased patient’s cancer was at an earlier stage when she presented to the defendant physician. The plaintiff’s expert also provided testimony that the survival rate for patients with Stage 1 or Stage 2B cervical cancer is higher than patients with Stage 3B. The court held that such evidence was sufficient to establish a prima facie case of proximate cause and to survive a motion for a directed verdict. The court held that the plaintiff was not required to prove that she would have had a greater than 50% chance of survival absent the alleged negligence. Rather, she simply had to present
“some evidence” that the alleged negligence proximately caused an increased risk of harm or lost chance of recovery. The plaintiff only needed to show that the physician’s negligence deprived the decedent of an opportunity to undergo treatment that could have been more effective if received earlier, not that the treatment would have necessarily have been more effective. The appellate court, therefore, reversed and remanded for a new trial. Hemminger v. LeMay, 2014 IL App (3d) 120392.
Section 2-622 Report Required for Some Types of Medical Battery Claims In McDonald v. Lipov, a pro se plaintiff brought claims against a variety of health professionals for medical malpractice and for medical battery. The defendants moved to dismiss, arguing that the plaintiff failed to attach a report of a reviewing physician as required under Section 2-622 of the Code of Civil Procedure, 735 ILCS 5/2–622. In the first appeal, which was decided with an unpublished order, the court affirmed the dismissal of the medical malpractice claims due to the plaintiff’s failure to comply with Section 2-622. The appellate court reversed the dismissal of the medical battery claims, however, finding that the dismissal should not have been with prejudice and that the plaintiff should have been afforded an opportunity to cure any pleading defects with regard to those claims. On remand, the plaintiff filed a 33-count second amended complaint that included 10 counts for medical battery. The plaintiff claimed that the catheter that was used in the subject RACZ caudal epidural injection procedure was not the type of catheter to which she consented. With his motion to dismiss, the defendant physician submitted his affidavit averring that the plaintiff did consent to the procedure and that the type of catheter used was an FDA-approved catheter for that procedure. The trial court thereafter dismissed the medical battery claims due to the plaintiff’s failure to provide a report of a reviewing physician under Section 2-622. The appellate court affirmed the dismissal of the medical battery claims. The court explained that, in a medical battery case, a party can recover by establishing that (1) there was no consent to the medical treatment performed; (2) the treatment was against the injured party’s consent; or (3) the treatment substantially varied from the consent granted. The court noted that not all medical battery claims require a report under Section 2-622. Where, however, a plaintiff will need to rely on expert testimony to prove the allegations of battery, a Section 2-622 report is required. The appellate court construed the plaintiff’s claim as being in — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) the nature of a claim that the treatment substantially varied from the consent granted. The court observed that, for the plaintiff to prevail at trial, she would need to prove that the catheter that the defendant physician used varied from her consent. To do so, the court found that the plaintiff would need to present medical expert testimony, as the issue was one that was beyond the knowledge of a layperson. Thus, under the facts of the case, the court held that the plaintiff was required to submit a health professional’s report under Section 2-622 to support her medical battery claim. Furthermore, because the plaintiff did not properly challenge the physician’s affidavit under Rule 191(b), the court held that the dismissal with prejudice was proper.
because the psychiatrist did not have any evidence that Jacob ever made any specific threats to harm her. The court noted that to hold otherwise would imperil the confidential nature of communications between a mental health professional and a patient. Such assurances of confidentiality are central to the patient-psychiatrist relationship and are necessary if the patient is to trust the mental health professional share information freely.
McDonald v. Lipov, 2014 IL App (2d) 130401.
Two cases in 2014 dealt with a hospital claiming that it could withhold a physician’s credentialing file under the Medical Studies Act, 735 ILCS 5/8-2101, and the Health Care Professional Credentials Data Collection Act, 410 ILCS 517/15(h). In one case, the Illinois Appellate Court Second District held that the plaintiff physician did not have a right to obtain his own file, while in another case the Illinois Appellate Court Fifth District held that the hospital was required to produce the file to a plaintiff claiming negligent credentialing.
Court Affirms Narrow Circumstances where Psychiatrist Owes a Duty to Warn In Sherer v. Sarma, a psychiatrist was sued by the mother of one of the psychiatrist’s patients who was killed by another of the same psychiatrist’s patients. The two patients, Jacob and Sara, were married and had been under the care of the psychiatrist for approximately five months before Jacob stabbed Sara to death. Sara’s mother sued the psychiatrist for failing to warn Sara of the supposed threat that Jacob posed. The trial court granted the psychiatrist’s motion for summary judgment. The trial court found that the plaintiff’s claims against the psychiatrist failed because there was no evidence that Jacob had ever made any specific threats against Sara that would give rise to the psychiatrist’s duty to warn Sara. The fact that Sara was also the psychiatrist’s patient did not change the duty that the psychiatrist owed to her. On appeal, the Illinois Appellate Court Fifth District thoroughly reviewed the case law in Illinois on the duty owed by a psychiatrist to third parties and followed the three-step analysis laid out in Eckhardt v. Kirts, 179 Ill. App. 3d 863 (2d Dist. 1989). In that case, the court held that, in order to maintain a cause of action against a mental health professional for breach of an alleged duty to warn third parties of the potential violent acts of a patient, the plaintiff must demonstrate that (1) the patient made specific threats of violence; (2) the threats were directed against a specific and readily identifiable person; and (3) there was either a direct physician-patient relationship between the defendant and the victim, or a special relationship between the patient and the victim. Applying the Eckhardt standard, the appellate court found that the third element was met, as there was a direct psychiatrist-patient relationship between the defendant and Sara. The court, however, found that the defendant psychiatrist had no legal duty to warn Sara
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Sherer v. Sarma, 2014 IL App (5th) 130207.
Physician Credentialing
Hospital Not Required under Medical Studies Act or Health Care Professionals Data Collection Act to Produce Credentialing File to Prospective Employee Physician In Davis v. Kewanee Hospital, the defendant hospital extended a conditional offer of employment to the plaintiff physician. After the hospital withdrew its offer, the physician requested information that the hospital obtained as part of its credentialing process, as the physician suspected that his failure to obtain the position was the result of supposedly slanderous comments by a former colleague. The hospital refused the request, and the physician brought suit for both preliminary and permanent injunctions under the Medical Studies Act, 735 ILCS 5/8-2101, and the Health Care Professional Credentials Data Collection Act (Credentials Act), 410 ILCS 517/15(h). The hospital moved to dismiss under Section 2-619(a)(9) of the Illinois Code of Civil Procedure, 735 ILCS 5/2-619(a)(9), and invoked the confidentiality provisions of both statutes. The hospital also argued that a credentialing decision was never made and, therefore, the physician did not have a right to the materials. The trial court agreed and dismissed the case. The physician appealed. On appeal, the hospital took a different approach and argued that the trial court properly dismissed the case because neither the
Medical Studies Act nor the Credentials Act provided an express private right of action that would allow the plaintiff physician to bring suit. Furthermore, the hospital argued that a private right of action be should not be implied in either statute. The Illinois Appellate Court Second District agreed that neither statute provided a private right of action. The appellate court likewise declined to find an implied right of action in either statute. With regard to the Medical Studies Act, the court found that the plaintiff physician was not an intended beneficiary of the statute. The court noted that the purpose of the Medical Studies Act was to ensure that the medical profession engaged in critical self-evaluation of peers in the interest of advancing the quality of healthcare. As such, it was the general public, not individual physicians, who were the beneficiaries of the statute. In addition, the Medical Studies Act was designed to prevent increased rates of death and illness that could occur without candid self-evaluation. By allowing the plaintiff physician access to his credentials file, the court explained, the purpose of the statute would be thwarted, as peers would be less likely to provide honest evaluation. The court pointed out that the plaintiff physician’s express purpose in obtaining the file was to find the identity of someone whom he believed slandered him for purposes of bringing a suit. Thus, the appellate court declined to find a private right of action under the Medical Studies Act. Similarly, the court held that the Credentials Act did not provide the physician with an implied private right of action either. The court observed that the purpose of the Credentials Act was to streamline the re-credentialing process and to prevent incorrect assessment and validation of a physician’s credentials. Like the Medical Studies Act, the Credentials Act was designed to promote honest peer evaluation. The court found that, if it were to permit the plaintiff physician access to that information, it would deter medical professionals from providing honest assessments in the future. Davis v. Kewanee Hosp., 2014 IL App (2d) 130304.
In Case for Negligent Credentialing, Physician’s Credentialing File and Other Documents Not Privileged under Medical Studies Act and Health Care Professionals Data Collection Act In Klaine v. Southern Illinois Hospital Services, the plaintiff brought suit against a defendant physician and hospital for malpractice in connection with a gallbladder surgery. Additionally, the plaintiff sued the hospital for negligent credentialing of the physician. In the course of discovery, the plaintiff sought the hospital’s credentialing file as well as a list of procedures performed by the
physician. Among other things, the hospital objected on the grounds that the credentialing file was protected under the Health Care Professional Credentials Data Collection Act (Credentials Act), 410 ILCS 517/15(h), and that the list of procedures was protected under the Medical Studies Act, 735 ILCS 5/8-2101. The trial court rejected the hospital’s arguments and ordered production of the documents. The hospital took a friendly contempt citation. On appeal, the Illinois Appellate Court Fifth District held that the file containing the physician’s application for staff privileges was not privileged under the Credentials Act. Although the Credentials Act contains a provision that the credentials data collected or obtained by a hospital shall be confidential, the court held that the confidentiality provision did not create an evidentiary or discovery privilege. The court, however, held that the hospital was permitted to redact the findings of the outside company it had retained to perform peer reviews. With regard to the list of procedures that the physician performed, the court held that the Medical Studies Act did not prevent the disclosure of that information. The court noted that the Medical Studies Act protects from disclosure only that information generated by the peer review committee. Information, however, that exists prior to the initiation of a peer review process is not protected from disclosure under the Medical Studies Act. The court found that the hospital’s list of procedures performed by the physician was preexisting information and was not created specifically as part of the peer review process. Klaine v. S. Ill. Hosp. Servs., 2014 IL App (5th) 130356.
Toxic Tort Asbestos Lawsuits Are Not Barred by Exclusive Remedy Provisions In Folta v. Ferrro Engineering, a case of first impression, the Illinois Appellate Court First District held that an employee can bring an action against his employer that is otherwise barred by the statute of repose under the Workers’ Compensation Act, 820 ILCS 305/1, et seq., and the Workers’ Occupational Diseases Act, 820 ILCS 310/1, et seq. (the Acts). The plaintiff, James Folta, brought his action against Ferro Engineering (Ferro), his former employer, and 14 other defendants that allegedly supplied Ferro with asbestos-containing products and equipment. Forty-one years later, Folta was diagnosed with peritoneal mesothelioma, allegedly caused by asbestos exposures — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) that occurred during his employment with Ferro as a product tester. Any cause of action under the Acts was time barred by the statute of repose, and the case was brought in the Circuit Court of Cook County under theories of negligence, premises liability, intentional misconduct, and fraud. Ferro argued that Folta’s action against it was barred by the exclusive remedy provisions of the Acts, and was granted a dismissal. The plaintiff appealed. The Workers’ Compensation Act and the Workers’ Occupational Diseases Act contain exclusive remedy provisions barring any recovery of damages by an employee outside of the Acts. On appeal, Folta argued that the exclusive remedy provisions do not apply because his injury was “not compensable” under the Acts, one of four exceptions that would allow him to bring a common law action against his employer. Ferro argued for a more narrow interpretation of the term “not compensable,” arguing that an injury is not connected to recoverability and should be considered compensable whenever it arises out of and in the course of employment. Rejecting Ferro’s interpretation, the court found that if recovery has no bearing on compensability, then the compensability prong of the four-part test becomes meaningless. If an injury is compensable merely because it arose out of and in the course of employment, then the test serves no purpose. It further found that Folta’s injury was “quite literally not compensable under the Act” in that all possibility of recovery is excluded because of the nature of Folta’s injury. Folta never had an opportunity to seek compensation under the Acts. Thus, the court reversed the judgment of the trial court, finding that Folta’s suit against Ferro was not time barred by the exclusive remedy provisions of the Acts and remanding the case for further proceedings. Folta v. Ferro Eng’g, 2014 IL App (1st) 123219, cert. allowed 20 N.E.3d 1253 (Table).
Seventh Circuit Reverses Class Certification in Groundwater Case In Parko v. Shell Oil Co., an environmental class action suit, the United States Court of Appeals for the Seventh Circuit held that a trial judge may not refuse to entertain arguments that bore on the propriety of class certification simply because those same arguments would also be relevant to the merits determination. A class of approximately 150 property owners in Roxana, Illinois, brought suit against Shell Oil Company and ConocoPhillips, along with some of their subsidiaries, alleging that the defendants owned and operated an oil refinery adjacent to the town since 1918. The plaintiffs claimed that the refinery leaked benzene and other contaminants into the groundwater under their homes, and they primarily sought damages for loss of property values. The defendants appealed
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certification of the class, arguing that there was no predominance of issues common to the entire class over individual issues. The requirement of predominance is not satisfied if individual questions overwhelm common issues. Mere assertion by the plaintiffs that common issues predominate is not enough. Rather, the court must receive evidence and resolve disputes bearing on issues vital to certification before deciding to certify the case. In Parko, the defendants argued that contamination occurred over a 90-year period involving various responsible parties and, consequently, that class members could well have experienced different levels of groundwater contamination, implying different damages caused by different polluters. It could not be assumed that each class member experienced the same diminution in property value, even if they experienced the same level of contamination. It was unclear if the plaintiffs even identified a common issue. The Seventh Circuit questioned the class’s intention to rely on their hydrogeologist’s measure of benzene in groundwater to show loss in property value. If the class’s expert’s opinions were rejected, there would be no basis for the claim that contaminated groundwater was the common cause of injury. Citing to the decision of the Illinois Appellate Court Fourth District in Bridgman v. Sanitary District of Decatur, 164 Ill. App. 3d 287 (4th Dist. 1987), the plaintiffs did not own the groundwater at issue. They only had a right to use it. The plaintiffs’ water supply did not even come from the groundwater, but instead from Roxana’s uncontaminated aquifer. Whether the Benzene was in the water supply or in groundwater that did not feed into the water supply was an issue that the district court should have explored prior to class certification, without treating predominance as a mere pleading requirement. Finding that the judge should have evaluated the validity of the plaintiffs’ injuries and damages model, in light of the defendants’ counterarguments, and should have taken evidence, the Seventh Circuit reversed and instructed the district court to revisit the issue of certification. Parko v. Shell Oil Co., 739 F.3d 1083 (7th Cir. 2014).
Loss of Consortium Barred when Exposures Occurred prior to Marriage In Smith v. Crane Co., the United States District Court for the Northern District of Illinois dismissed the plaintiff’s loss of consortium claims when exposures to asbestos predated the couple’s marriage. Kenneth Smith served in the United States Navy from 1964 to 1968. He and Diane Smith were married more than 10 years later, on August 3, 1979. On June 25, 2013, Kenneth was diagnosed with malignant mesothelioma. The plaintiffs brought suit against Crane
Co. and 25 other defendants, alleging that Kenneth’s disease was a result of exposure to asbestos that occurred during his service in the U.S. Navy and for Diane’s loss of consortium due to such exposures, as well as Kenneth’s subsequent illness. Relying on two Illinois appellate court cases, Crane Co. moved to dismiss Diane’s loss of consortium count, arguing that no duty was owed to her because Kenneth’s exposure to asbestos predated the couple’s marriage. The plaintiffs contended that the Illinois discovery rule allows for a loss of consortium claim to toll along with the underlying cause of action. Bound to predict the outcome as if decided by the Illinois Supreme Court, which has yet to address this issue, the district court held in favor of Crane Co. The court found that the Illinois discovery rule was not intended to determine whether a tort claim ever arose in the first place, thus holding that the defendants owned no duty to Diane because the plaintiffs were not married during the period of alleged exposure and no marital relationship existed at the time of exposure. Smith v. Crane Co., No. 13 C 7411, 2014 WL 3509731 (N.D. Ill. July 14, 2014).
Automobile Cases Summary Judgment Granted in Favor of CTA, which Met Its Duty of Care to Passengers In Carlson v. Chicago Transit Authority, the Illinois appellate court affirmed a summary judgment order for a defendant in an alleged fall inside a bus in which the plaintiffs were passengers. The plaintiffs claimed that they were caused to fall when the bus stopped suddenly, knocking them to the floor and causing each of them to be injured. The plaintiffs brought suit against the bus driver and the CTA for negligently operating the bus and failing to train the driver properly. The defendants argued that the plaintiffs could not establish that the driver failed to exercise due care when operating the bus because another vehicle suddenly cut off the bus. The defendants had video surveillance of the alleged fall that corroborated the defendants’ version of the events. The trial court concluded that no evidence was in the record to establish negligence on the part of the defendants. The plaintiffs appealed. Illinois courts have long held that, although a common carrier is not an insurer of the absolute safety of a passenger, a common carrier has a duty to its passengers to exercise the highest degree of care consistent with the practical operation of its conveyances. Accordingly, the plaintiff argued that a question of fact existed for the
jury to consider whether the driver of the bus was negligent in this degree of care owed to the plaintiffs. The appellate court, however, noted that factual questions become questions of law when there could be no differences in the judgment of reasonable people when presented with undisputed facts. The evidence established that the plaintiffs were injured by a near collision between two vehicles, one controlled by a person other than the defendants. The record showed that the defendants’ conduct satisfied the duty that they owed to the plaintiffs. As a result, the appellate court affirmed the trial court’s granting of summary judgment. Carlson v. Chi. Transit Auth., 2014 IL App (1st) 122463.
Appellate Court Reverses Jury Verdict that Found Plaintiff Contributorily Negligent In Wiggins v. Bonsack, the Illinois appellate court reversed and remanded a judgment entered in favor of the defendant after a jury returned a general verdict in favor of the defendant arising from a two-vehicle accident. The defendant was attempting to exit a gas station and cross two lanes of traffic to head south. The defendant was waved through by one of the stopped vehicles in heavy traffic— a unidentified individual in a red truck. The plaintiff was 15 years
The plaintiff argued on appeal that judgment should be entered finding the defendant liable because the evidence so overwhelmingly favored the plaintiff that the verdict for the defendant could not stand.
old when the accident occurred and was driving on a permit. The plaintiff’s mother was in the passenger seat. The plaintiff was approaching the traffic light at the intersection and was applying her brakes when the defendant’s car came out into her lane, causing the vehicles to collide. The right front panel of the plaintiff’s vehicle hit the left front quarter panel of the defendant’s vehicle. The airbags did not deploy. The plaintiff refused treatment at the scene. She later started experiencing sharp pains in her neck, headaches, and lower back pain. Ultimately, she sought treatment with a chiropractor. The chi— Continued on next page
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Survey of 2014 Tort Law Cases (Continued) ropractor diagnosed the plaintiff with cervical whiplash with a lumbar sprain/strain and opined that the plaintiff’s injuries were caused by the collision. The chiropractor treated the plaintiff 70 times between February 2008 and June 2010, when he discharged the plaintiff and found her to be at maximum medical improvement. The defendant offered no medical testimony. There was no evidence that the plaintiff suffered prior neck or back pain or suffered from headaches. At the close of all the evidence, the trial court directed a verdict for the plaintiff, finding that the defendant negligently operated her car at the time of the crash and that the defendant’s negligence was a cause of the crash, but denied the plaintiff’s motion for directed verdict on liability. In light of the directed verdict, the trial court refused to instruct the jury on the defendant’s defense that the unknown individual in the red truck was the sole proximate cause of the collision. The trial court did, however, instruct the jury on the defendant’s other affirmative defense, contributory negligence. The defendant asserted that the plaintiff was contributorily negligent in failing to operate her vehicle at a safe speed and in failing to slow or to stop her vehicle upon recognizing that the driver of another vehicle had signaled that it was safe to come out into the roadway. The trial court also instructed the jury on proximate cause and damages. The jury returned a general verdict in favor of the defendant. The plaintiff moved for a judgment n.o.v. or, in the alternative, a new trial. The trial court denied the plaintiff’s motion and entered judgment in favor of the defendant. The plaintiff appealed. The plaintiff argued on appeal that judgment should be entered finding the defendant liable because the evidence so overwhelmingly favored the plaintiff that the verdict for the defendant could not stand. The appellate court agreed. The appellate court opined that the defendant admitted that the plaintiff did nothing to cause the accident and provided no evidence to establish that the plaintiff operated her vehicle negligently. The appellate court, therefore, found that the trial court erred in giving a jury instruction on contributory negligence. The appellate court further found that the plaintiff offered the testimony of her chiropractor, who testified that her injuries were consistent with the type of accident she described and that her delay in treatment was not unusual given her tender years and her belief that the symptoms would disappear. The defendant offered no medical evidence to the contrary. The appellate court concluded that, because the record showed that the defendant’s negligence was the proximate cause of the accident and the plaintiff was not contributorily negligent, the case must be reversed and remanded with directions to enter judgment in favor of the plaintiff on the issue of liability and to hold a new trial on the issue of the plaintiff’s damages only. The appellate court based its ruling on a similar case, Hickox v. Erwin, 101 Ill. App. 3d 585 (5th Dist. 1981). Wiggins v. Bonsack, 2014 IL App (5th) 130123.
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Workers’ Compensation Kenneth F. Werts, Craig & Craig, LLC, Mt. Vernon R. Mark Cosimini, Rusin & Maciorowski, Ltd., Champaign Reprinted from Illinois Workers’ Compensation Guidebook, 2014 Edition with permission. © 2014 Matthew Bender & Company, Inc., a member of the LexisNexis ® Group. All rights reserved.
Arising Out of and in the Course Of Employment Court says “ordinary” reaching activity is nevertheless risk of employment Acknowledging that there are three categories of risk to which an employee may be exposed: (1) risks distinctly associated with her employment; (2) personal risks; and (3) neutral risks which have no particular employment or personal characteristics, the Illinois appellate court recently held that a parts inspector’s action of reaching into a long, narrow box to retrieve a small part was a risk associated with the employment and a shoulder injury that occurred as a result of the inspector’s action arose from the employment in spite of the fact that the same sort of activity was relatively common among the general public. Reversing a decision by the circuit court that had in turn affirmed a decision of the state’s Workers’ Compensation Commission denying workers’ compensation benefits in the case, the court held an earlier finding that the inspector had only been exposed to a neutral risk was against the manifest weight of the evidence. Young v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130392WC (July 7, 2014).
Divided high court finds injured employee who took job 200 miles from his house was not a “traveling employee” Construing the “traveling employee” rule, the Supreme Court of Illinois held that a worker who took a position with an employer located some 200 miles from his home, who had temporarily relocated at a nearby motel for the job, and was seriously injured in an automobile accident on his way to work, was not a traveling employee entitled to workers’ compensation benefits. The majority accordingly reversed a decision rendered by the appellate court that had ruled to the contrary. The majority noted the general rule related to going and coming injuries, that an injury incurred by an employee in going to or returning from the place of employment
does not arise out of or in the course of the employment and, hence, is not compensable, but that an exception existed for “traveling employees.” The majority of the high court stressed that the injured worker was not a permanent employee of the employer. Nor was he working for the employer on a long-term exclusive basis. He had worked only four other short-term employer projects over the two years preceding the accident. Furthermore, nothing in his contract required him to travel out of his union’s territory to take the position. As the injured worker testified, he made the personal decision that the benefits of the pay outweighed the personal cost of traveling. The majority indicated that the worker traveled from the work premises to his residing location‚ the motel‚ as did all other employees. The employer did not reimburse him for his travel expenses, nor did it assist him in making his travel arrangements. The majority indicated that due to these facts, the Commission’s conclusion (consistent with that of the lower appellate court) that the worker was a traveling employee was against the manifest weight of the evidence. The majority indicated the lower appellate court’s decision would have established an inappropriate policy: that while an employee who chose to relocate closer to a temporary job site could receive benefits if injured on the way to work, an employee who permanently resided close to the job site was not so entitled. Venture-Newberg-Perini v. Illinois Workers’ Comp. Comm’n, 2013 IL 115728 (Dec. 19, 2013).
Temporary employee’s slip and fall in parking lot as she exited vehicle was within course of employment The court held that the employee’s injuries, sustained when she slipped and fell on ice in a parking lot as she exited her vehicle to go to work, arose in the course of her employment under 820 ILCS 305/2 (2010). The employee had been assigned a space in the lot based on her status as an employer’s temporary employee and consistent with her supervisor’s direction to the person who assigned the space, so she was entitled to recover as a matter of law. Her injuries arose out of her employment because the evidence showed she slipped on ice in the employer-furnished parking lot as she closed her car door shortly after arriving at work, establishing her right to benefits as a matter of law. Suter v. Illinois Workers’ Comp. Comm’n, 2013 IL App (4th) 130049WC, 998 N.E.2d 971 (App. Ct. 2013).
Medical testimony that claimant’s high blood alcohol level affected claimant’s ability to function was sufficient to support denial of compensation claim Claimant sought workers’ compensation benefits, contending he injured his right foot and ankle while working. The arbitrator found that claimant’s intoxication was the sole cause of the accident. Alternatively, the arbitrator concluded that claimant was so intoxicated at the time of the accident that he had departed from his employment, and, therefore, his accident did not arise out of and in the course of his employment. Claimant testified that following his injury he was taken to a hospital where he provided a urine sample. He testified that he did not recall anyone taking blood from him. He stated that the only reason he knew that the staff had drawn blood was because they told him they had, and they also informed him that his blood-alcohol level at that time was 0.194. Claimant denied
Intoxication which does not incapacitate the employee from following his occupation is not sufficient to defeat the recovery of compensation although the intoxication may be a contributing cause of the injury.
drinking alcohol that night and testified that he did not know where the alcohol came from. Claimant was also told that he had drugs in his system. Claimant believed the hospital staff gave him morphine for pain control. Initially noting that the claimant had the burden of establishing by a preponderance of the evidence that his injury arose out of and in the course of the employment, the appellate court added that intoxication is not a per se bar to workers’ compensation benefits. Intoxication which does not incapacitate the employee from following his occupation is not sufficient to defeat the recovery of compensation although the intoxication may be a contributing cause of the injury. Conceding that he may have been intoxicated, claimant argued that there was no evidence that he was unable to perform his work duties at the time of his injury. Although claimant asserted that his testimony supported a finding that he was able to perform the functions of his job, the Commission, as the trier of — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) fact, was entitled to reject this testimony, especially in light of his disavowal of drinking any alcohol on the night in question despite the abundance of evidence to the contrary. More important, indicated the court, there was sufficient evidence from which the Commission could determine that claimant was unable to follow his employment on the night of the accident. In so finding, the Commission relied on the opinion of the examining physician, who testified that claimant’s blood-alcohol concentration would have affected claimant’s ability to function and would have rendered him unable to adequately notice and comprehend what was happening. The Commission’s findings that claimant’s intoxication was the sole cause of his accident or, alternatively, that his intoxication rendered him unable to perform the duties of his position and therefore constituted a departure from his employment were supported by the evidence of record and were not against the manifest weight of the evidence. As such, the Commission’s denial of workers’ compensation benefits was affirmed. Scoggins v. Illinois Workers’ Comp. Comm’n, 2014 IL App (5th) 130198WC-U (unpublished) (Apr. 14, 2014).
Appellate court affirms Commission’s determination that worker injured in fight was the “aggressor;” no compensation could be awarded The claimant was involved in a physical altercation with another employee of the employer and sustained a rotator cuff injury to his left shoulder. The claimant filed a claim under the Act and the matter proceeded to an expedited hearing. At the hearing, the employer maintained, among other issues, that the claimant was the aggressor in the physical altercation with the other employee and, therefore, under the aggressor defense, his injuries did not arise out of his employment. Testimony indicated that the altercation related to a confederate flag license plate on the front of a vehicle that had been driven by another employee, Fenton. Claimant testified that he believed that Fenton’s confederate flag license plate constituted harassment because he knew that the confederate flag was used by the Ku Klux Klan. The arbitrator ruled in favor of the claimant, finding that he did not initiate the physical altercation with the coworker, but was injured as a result of being assaulted by a subordinate employee when he attempted to confront that employee about a racial harassment issue. The arbitrator awarded the claimant temporary total disability (TTD) benefits and medical expenses. The employer appealed the decision to the Commission, and the Commission unanimously reversed the arbitrator’s decision, finding that “based on the totality of the circumstances, that [the claimant] was the aggressor in the physical altercation that brought about his injuries.”
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The Commission noted the testimony of another employee that the claimant seemed angry about the confederate flag license plate, used his personal vehicle to block Fenton’s vehicle in the parking lot, and appeared upset when they returned to the parking lot at the end of the work day and saw that Fenton had moved his vehicle from its original spot. The Commission also noted the testimony of yet another co-employee that the claimant ripped the license plate from Fenton’s vehicle and jumped over the hood of the vehicle as the vehicle was moving in reverse and without first talking to Fenton. The Commission found that the claimant’s testimony was not credible and that the claimant’s own actions “put him in the situation in which he was injured.” Initially noting that the “aggressor defense” arises from the requirement that compensable injuries must arise out of the employment, the appellate court indicated the dispute between the claimant and Fenton was not purely personal. The court noted that evidence presented at the arbitration hearing could support more than one inference with respect to whether the claimant was the aggressor. Had the Commission determined that the claimant was not the aggressor, the court would be required to affirm that finding as that finding was supported by inferences that could be drawn from the evidence. The Commission, however, concluded that the claimant acted as the aggressor based on the totality of the circumstances. This finding was also supported by inferences drawn from the record and was not completely unreasonable. Therefore, the court was required to affirm the Commission’s decision. Tiner v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130456WC-U (unpublished) (Apr. 11, 2014).
Teacher’s fall on “fluffier” carpet did not arise out of and in the course of the employment Claimant, a foreign language teacher, appealed from the judgment of the circuit court which confirmed a decision of the Commission denying her application for benefits under the Workers’ Compensation Act (Act) for injuries she sustained as a result of a fall while at work. Claimant testified that during the summer before the injury, new carpet was installed in her classroom, that it was “fluffier” than the carpeting that was previously in place, and that she fell when her foot “caught on the carpet” as she was walking to the table in the front of the classroom. At the time of the fall, claimant was wearing gym shoes and had a brace on her left foot. The brace was necessitated by claimant’s preexisting rheumatoid arthritis. She testified that she was unaware of any defect in the carpet and that, at the time of the fall, she was not holding anything in her hands and she was not walking at an increased rate of speed. Based
on the foregoing evidence, the arbitrator concluded that claimant’s injuries were not compensable under the Act–that claimant’s injury stemmed from a neutral risk. Initially noting that, as a general rule, the question of whether an employee’s injury arose out of his or her employment was one of fact, the court agreed that in the context of falls, neutral risks include falls on level ground or while traversing stairs. By itself, walking across a floor at the employer’s place of business does not establish a risk greater than that faced by the general public. As to the newer, “fluffier” carpeting, and the claimant’s testimony that she was wearing rubber sole shoes and a brace as a result of her preexisting medical condition, that the mood in the classroom because of the unusual schedule for the day was an unusual factor, and that she was walking across the carpet while trying to maintain eye contact with 16 “very active” students, the court disagreed with claimant. The court indicated claimant presented no evidence that any of these factors contributed to her fall. Claimant identified no defect in the flooring and she presented no evidence that her shoes or her medical condition played a role in her injury and she cited no evidence that the students’ conduct distracted her or that she was responding to student behavior when she fell. The Commission’s decision would stand. Meierdirks v. Illinois Workers’ Comp. Comm’n, 2014 IL App (1st) 130749WC-U (unpublished) (Mar. 3, 2014).
90-year-old employee’s act of sitting in a chair at employer’s business did not establish a risk greater than that faced by the general public Claimant founded the employer’s business in 1946 and continued to work for the employer since that time. On October 12, 2007, the date of the alleged accident, he was 90 years old. At that time, his duties included paying bills, counting money, and making deposits. He typically opened the business in the morning between 7 and 7:30 a.m. and worked four hours per day. On the date of alleged injury, a co-worker came into the office and found claimant on the floor. Claimant indicated he had fallen off his chair. He was transported by ambulance to a hospital where he told medical personnel that he “tripped and fell to [the] floor.” Claimant was diagnosed with a broken hip. The treating physician’s records note that claimant’s injury occurred as claimant “was attempting to sit down in an office chair when it rolled away from him and he fell onto the floor of his work place.” Claimant underwent surgery to insert a rod into his hip. The arbitrator accepted that decedent’s injuries occurred when he fell after his chair slid away as he was attempting to sit down. According to the arbitrator, however, claimant did not introduce
any evidence “to prove that chairs with wheels or casters (of the type that [decedent] used) are exclusively found in the workplace.” Consequently, the arbitrator found that claimant failed to establish that decedent’s injuries arose out of his employment. The Commission affirmed the decision of the arbitrator, but determined that the arbitrator applied the wrong legal standard. The Commission indicated the proper legal standard was whether [claimant’s] employment subjected him to a greater risk of injury than that to which a member of the general public would have to deal with on a daily basis. Applying the proper legal standard to the evidence, the Commission affirmed the Arbitrator’s decision. The circuit court confirmed. The appellate court agreed that the claimant’s fall could best be categorized as resulting from a neutral risk. Injuries from a neutral risk generally do not arise out of the employment and are compensable under the Act only where the employee was exposed to the risk to a greater degree than the general public. Claimant presented no evidence that the chair was defective, that the floor was slick or that the floor contained any defect. By itself, the act of sitting at the employer’s place of business did not establish a risk greater than that faced by the general public. Based upon that finding, the Appellate Court reversed the Decision of the Commission and denied benefits to the claimant. Sasaki v. Illinois Workers’ Comp. Comm’n, 2014 IL App (1st) 131669WC-U (unpublished) (June 30, 2014).
Legal secretary’s injuries while carrying baked goods into the law office did not arise out of and in the course of the employment Claimant, a legal secretary employed by the employer, testified that it was customary for the law firm’s staff to celebrate birthdays and other occasions by bringing in items to eat such as baked goods. Claimant further testified that on July 11, 2011, an individual was returning to employment at the law firm after a short absence. Claimant made a buttermilk pie and cheeseburger biscuits for the occasion. Claimant was carrying her purse and the two plastic containers filled with the baked goods. The plastic containers were stacked on top of each other. Claimant testified that as she approached the landing just inside the employer’s building, the top container started to slide off the other container. Claimant testified that when she reached for the top container, she lost her balance, caught her toe on a metal strip at the top of the stairs, and fell. Claimant hit her head on the wall and landed on her stomach with her right arm underneath her. No one witnessed the accident. The arbitrator held that claimant did not — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) sustain an accident arising out of her employment with respondent, that that claimant chose to take baked goods to the employer’s office and that she was not directed to prepare or bring the baked goods, that the testimony illustrated that claimant lost her balance and began to fall as she attempted to catch a container as it slid off another container. The arbitrator noted that although claimant testified that her toe struck the metal strip at the end of the landing, there was no evidence that the metal strip was defective or that the stairway or the metal strip created an increased risk beyond that to which the general public is exposed. The Commission affirmed and adopted the arbitrator’s decision. Thereafter, claimant sought judicial review of the Commission’s decision in the circuit court, which confirmed the Commission’s decision. Claimant appealed. The appellate court held that the Commission’s finding that claimant did not sustain an accident arising out of her employment was not against the manifest weight of the evidence where claimant failed to prove that the employer’s premises were defective or that she was exposed to a common risk to a greater degree than the general public and she otherwise failed to establish that she was engaged in an activity in furtherance of her employer’s business at the time of the accident. Anderegg v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130418WC-U (unpublished) (June 25, 2014).
Home health care nurse fails to convince Commission her slip and fall arose out of and in the course of her employment The appellate court here held that the Commission’s finding that the claimant failed to prove an accident was not against the manifest weight of the evidence where the claimant testified that while working as a nurse providing home health care services, she tripped over a steel pipe that ran across one of the steps to the residence where she was assigned. Noting that other evidence contradicted claimant’s version of the situation—e.g., the owners of the residence indicated the steps to which claimant referred were actually covered by a wooden deck on the date she alleged her injury, so the steps could not have caused her fall. One of claimant’s duties was to point out hazards existing at her patient’s homes—those hazards might cause injuries to the patients themselves—but she did not make mention of the pipe in a report that she had earlier filed. The appellate court found that given this evidence, the Commission’s finding that claimant had failed to prove an accident was not against the manifest weight of the evidence. Hacker v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130199WC-U (unpublished) (June 24, 2014).
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Causal Connection Courthouse Employee’s Fall Near Courthouse Door Found Compensable Reversing the denial of benefits to a county courthouse employee, who caught her two-inch heel in a crack in the sidewalk just outside the courthouse door as she returned from a work-related meeting in a nearby building, the Illinois appellate court found that the employee faced a special risk or hazard‚—the defect in the sidewalk—at the time of her injury. Because that special risk or hazard existed at a point that was the sole or usual route to the employer’s premises—other doors were locked at that time of day—it did not matter that the general public faced the same risk, said the court. Because the demands of the employee’s job required her to attend meetings in a nearby administrative building, her risk of injury on the defective sidewalk was greater than that faced by the general public. Brais v. Illinois Workers’ Comp. Comm’n, 2014 IL App (3d) 120820WC (May 8, 2014).
Employer responsible for “every natural consequence” of original injury Claimant, a food-service manager, stated he picked up a case of bottled soda weighing about 40 pounds while working, felt immediate pain and heard a pop in his back, as well as a hissing sound. He worked the rest of his shift in pain. For several days thereafter, Claimant indicated he had increased pain in his back and could walk only with great difficulty. Six days after the initial incident, Claimant arose to go to work, but fell down the stairs in his house when his left foot gave way due, he claimed, to severe pain in his back that was radiating down his leg. Claimant fell down the stairs, sustaining lacerations and bruises on his elbows, arms, and chest. Claimant was also bleeding from his nose as a result of the fall. Claimant’s wife called paramedics, who arrived and helped claimant to his feet. Claimant declined to be taken to a hospital and instead went to work. At work, claimant did paperwork in an office. He could not, however, get out of his desk chair due to pain. A coworker eventually contacted claimant’s wife. She came and took claimant to the hospital, where he was admitted. At the hospital, claimant was noted to have abrasions on his head, knees, elbows, and fingers. X-rays revealed olecranon bursitis in both elbows. Claimant continued to have multiple medical problems, underwent multiple surgeries, some associated with his back, but others associated with internal conditions. He spent time in intensive care and altogether
[T]he court indicated it was well established that prior good health followed by a change immediately following an accident allowed an inference that a subsequent condition of ill-being was the result of the accident. When a primary injury is shown to have arisen out of and in the course of employment, every natural consequence that flows from the injury likewise arises out of the employment.
incurred more than $400,000 in medical charges. Claimant’s expert opined that claimant’s condition was caused by either his olecranon bursitis or a spinal infection that developed during his hospital stays. Experts offered by the employer had differing views. The appellate court noted that it could not substitute its judgment for that of the Commission, that the latter had found Claimant’s expert more persuasive. Furthermore, the court indicated it was well established that prior good health followed by a change immediately following an accident allowed an inference that a subsequent condition of ill-being was the result of the accident. When a primary injury is shown to have arisen out of and in the course of employment, every natural consequence that flows from the injury likewise arises out of the employment. Moreover, employment need be only a cause, not the sole or primary cause, of a claimant’s condition, an employer takes an employee as it finds him, and the existence of a preexisting condition does not preclude recovery under the Act. Compass Group v. Illinois Workers’ Comp. Comm’n, 2014 Ill. App. 2d 121283WC (Mar. 28, 2014).
Increased risk of injury may be either “qualitatively” or “quantitatively” shown The Illinois appellate court affirmed an award of workers’ compensation benefits to a Community Service Officer who sustained injuries to his right knee and back when his knee “gave out” while he traversed a stairway in the police station where he worked. The court acknowledged that falling while traversing stairs was a neutral
risk, and that injuries resulting therefrom generally did not arise out of the employment. The court noted an exception, however, where the requirements of the claimant’s employment created a risk to which the general public was not exposed. The court added that the increased risk could be qualitative or quantitative, such as where the claimant was exposed to a common risk more frequently than the general public. The court observed that the evidence indicated the claimant had to climb and descend the stairs at least six times each day. There was sufficient evidence to support the finding that the claimant faced a risk of injury greater than that to which the general public was exposed. Village of Villa Park v. Illinois Workers’ Comp. Comm’n (Simons), 2013 Ill. App. 2d 130038WC (Dec. 31, 2013).
Commission’s decision that former coal miner suffered coal workers’ pneumoconiosis was not against manifest weight of evidence Claimant filed an application for adjustment of claim pursuant to the Workers’ Occupational Diseases Act (Act), seeking benefits from the coal company. Claimant alleged that as a result of inhaling coal-mine dust, he experiences shortness of breath and exercise intolerance. Following a hearing, the arbitrator denied benefits, finding that claimant failed to prove by a preponderance of the evidence that he suffered from an occupational disease that arose out of and in the course of his employment with respondent. The Commission reversed, finding that claimant met his burden of proving he has coal workers’ pneumoconiosis (CWP) and that the disease was causally connected to his employment as a coal miner. The Commission further determined that claimant established disablement within two years after the date of his last exposure to the hazards of the occupational disease and that claimant provided timely notice of the disablement to the coal company. The Commission awarded claimant 50 weeks of permanent partial disability (PPD) benefits, representing 10% of the person as a whole. The circuit court confirmed the decision of the Commission. On appeal, the coal company contended that the Commission’s findings were against the manifest weight of the evidence. In particular, the coal company challenged the findings that claimant has an occupational disease, that he proved disablement within the statutory time frame, and that claimant is permanently partially disabled to the extent of 10% of the person as a whole. The appellate court affirmed. The court reasoned that while several doctors differed in their interpretations of the category of CWP and the results of an x-ray, they both agreed claimant had — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) CWP. The Commission had before it conflicting medical opinions on the issue whether claimant suffered from an occupational disease. The Commission resolved this conflict in claimant’s favor, as was its province to do. Given the record as a whole, and in light of the Commission’s role in weighing the evidence, the appellate court could not say that a conclusion opposite to the one reached by the Commission was clearly apparent. As such, the Commission’s decision that claimant suffers an occupational disease as a result of his exposure to the hazards of coal mining was not against the manifest weight of the evidence. Freeman United Coal Co. v. Illinois Workers’ Comp. Comm’n, 2013 Ill. App. 5th 120564WC, 999 N.E.2d 382, (App. Ct. 2013).
Claimant’s current condition of ill-being not causally connected to fall from ladder where claimant presented no emergency room medical records nor the initial first visit notes of treating physicians The court held that the Commission’s finding that the claimant’s current condition of ill-being was not causally related to an industrial accident was not against the manifest weight of the evidence. The evidence indicated claimant suffered an 8-foot fall from a ladder while working on a construction project, but none of the witnesses indicated claimant injured his back in the fall. Even though the claimant testified to immediately experiencing right knee pain after the accident, no medical records were presented regarding any diagnosis of an injury to the right knee and the claimant submitted no expert medical opinion testimony establishing a causal connection between the current condition of the claimant’s right knee and the accident. Moreover, the record contained no documentation regarding the claimant’s emergency room visits or the treating physician’s first visits. The arbitrator observed that due to the lack of these medical records, he was forced to accept the claimant’s testimony as the only evidence that the claimant initially complained of right knee pain immediately after the accident. The Commission disagreed with the Arbitrator and held the tryer of fact was not obligated to accept the claimant’s testimony. Loftis v. Illinois Workers’ Comp. Comm’n, 2014 Ill. App. 2d 130421WC-U (unpublished) (July 7, 2014).
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Accident need not be sole or primary cause; it must only be a cause of claimant’s injury Claimant, a boilermaker, appealed the circuit court order that confirmed the decision of the Commission finding no causal connection between his left shoulder injury and his employment. Claimant identified two incidents, one on June 11, when he initially felt shoulder pain, and a second, on July 27, when he was performing heaving hoisting. Reviewing the evidence and the record, the divided appellate court indicated that regardless of whether the claimant’s shoulder condition started on June 11, it was undisputed that the claimant’s symptoms worsened and persisted after he hoisted, via overhead chain-pulling, heavy dampers on July 27. The majority indicated that while there was some conflict among the medical testimony, both doctors agreed that the overhead chain-pulling work on July 27 could have aggravated a preexisting shoulder condition and caused it to become symptomatic. The claimant’s medical records established that the shoulder pain he experienced on June 11 had not required further treatment while the shoulder pain he experienced on and after July 27 persisted, worsened over time, and prevented him from working. The majority stressed that the claimant’s accident need not be the sole or primary cause, but it must only be a cause, and here the evidence was undisputed that the claimant’s work on July 27 either caused or aggravated a preexisting condition in his shoulder. The majority indicated the case needed to be remanded for further proceedings. The dissent indicated that due to the deference to be accorded the Commission’s findings of fact, the Commission’s determination was not against the manifest weight of the evidence. Anderson v. Illinois Workers’ Comp. Comm’n, 2014 IL App (5th) 130186WC-U (unpublished) (May 8, 2014).
Commission, as finder of fact, is not bound to accept even unrebutted testimony, so long as it has a sound reason for doing so Claimant appealed a circuit court order confirming a decision of the Commission denying his claim for benefits under the Workers’ Compensation Act. Claimant has been employed by respondent for a period of 10 years as an electrician. On the date of injury, claimant had finished his shift and had taken a shower at the company locker room. He then put on his clothes and started to leave. As he was walking down some metal steps holding the handrail, he slipped and fell. Claimant testified that the steps were wet, since they were
“frequented by people as they come out of the showers.” He was still on respondent’s property. Claimant landed on his left hip. When he opened his eyes, two employees were standing over him. They told claimant that he had gone unconscious. The Commission, adopting the decision of the arbitrator, found that claimant had failed to prove that “the accident was anything other than an unexplained fall.” It found claimant lacked credibility for several reasons. First, the Commission found it incredible that claimant would recall his hand being wet after he fell down a flight of stairs and lost consciousness. The Commission also found it noteworthy that there was no mention of water being on the steps prior to the arbitration hearing in any of the doctors’ records or in the accident report claimant completed. Second, it cited claimant’s testimony that he did not realize that there was anything wrong with his hip prior to his fall. The Commission explained, “The medical records contain so many instances of left hip pain [that] he could not have simply forgotten about an occasional complaint.” The circuit court confirmed the Commission’s decision and claimant appealed. The appellate court first noted that the fall itself was insufficient to establish the employer’s responsibility; the act of traversing a flight of stairs does not expose a claimant to a greater risk of harm than that faced by the general public. The court indicated that claimant’s contention that there was water on the steps was not supported by anything other than claimant’s own testimony, which was “thin at best.” While claimant’s testimony was unrebutted, the Commission, as finder of fact, is not bound to accept even unrebutted testimony, so long as it has a sound reason for doing so. Here, the Commission articulated several reasons for doubting the veracity of claimant’s testimony. Noting that the Commission expressly held that “there is insufficient evidence to prove the accident was anything other than an unexplained fall,” the appellate court indicated claimant’s assertion that the Commission found his fall was idiopathic was not borne out by the plain language of the Commission’s actual decision. Mathis v. Illinois Workers’ Comp. Comm’n, 2014 IL App (5th) 130301WC-U (unpublished) (Apr. 28, 2014).
In split opinion, Court affirms mental injury award in “Pathfinder-like” vehicle accident The employer appealed an order of the circuit court reversing a decision of the Commission and awarding the employee benefits under the Act. The circuit court concluded that the Commission had erred as a matter of law in its application of Pathfinder Co. v. Industrial Comm’n, 62 Ill. 2d 556, 343 N.E.2d 913 (1976). Accordingly, the circuit court reinstated the decision of the arbitrator, which the Commission had reversed. The appellate court stated the issue: did claimant witness the sort of event that would provide a basis for an award under the Act for a psychological injury? It was not seriously disputed that claimant suffered from PTSD. Claimant was employed as a para transit driver. His duties involved transporting individuals, who were typically in wheelchairs, to various locations. A videotape mounted on the front of claimant’s vehicle offered a view of a serious accident involving two vehicles near claimant’s. Debris from the wreck showered onto claimant’s windshield. A second videotape showed the claimant’s reaction to the wreck. A microphone picked up claimant’s words in which he stated that those involved in the wreck were dead. Claimant later testified that he saw one of the driver’s neck snap and that he feared for the safety of himself and his passengers. The Commission found claimant’s testimony not to be credible, indicating that while claimant testified he looked into the eyes of the other driver, the tape did not show the driver of either of the other two vehicles. In a split opinion, the appellate court affirmed the circuit court in relevant part, initially observing that, according to the Pathfinder decision, recovery may be had for a “sudden, severe emotional shock, traceable to a definite time and place and to a readily perceivable cause.” But the majority added that while not completely irrelevant, Pathfinder and other cases cited provided only limited guidance here, as they lacked an essential element present in this case. The majority indicated the Commission had not found the claimant’s testimony in general to lack credibility, just a part. The majority indicated that, having viewed the videotape, the accident was clearly the sort of sudden shocking event for which recovery may be had. Even if the majority were to accept the Commission’s finding that claimant was not credible with respect to observing the driver of the SUV’s neck snap or, more importantly, if the court were to construe this finding as pertaining to the driver of the sedan, it would still come to the same result. As nothing save the nature of the event observed by claimant was seriously in dispute, the majority agreed with the circuit court. Thompson v. Cook Dupage Transp., 2013 IL App (1st) 123208WC-U (unpublished) (Dec. 30, 2013). — Continued on next page
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Employment Status Football players could not maintain they were employees of company where employment contracts clearly designated a separate entity as the employer Defendants appealed a trial court’s order denying their motion for summary judgment and granting summary judgment in favor of plaintiff, an insurance company that wrote coverage for Championship Investments, LLC. On appeal, defendants argued that the trial court erred: (1) because there was a genuine issue of material fact regarding whether defendants were employees of plaintiff’s insured, Championship; and (2) by ruling that defendants’ claims were not compensable under Wisconsin’s workers’ compensation law. Defendants had signed individual contracts to play football for the Rock River Raptors (Raptors) indoor football team for the 2009 season. The Raptors played its home games in Rockford, Illinois. On several dates in 2009, defendants were injured while playing home games in Rockford. In June 2009, defendants filed applications for benefits with the Illinois Workers’ Compensation Commission, contending that the plaintiff-insurer, had written coverage for Championship Investments, LLC, which defendants claimed owned the Raptors. The evidence tended to show that Championship was a limited liability company formed in 2006 in Wisconsin to operate the Wisconsin Wolfpack, a football team that participated in a separate, outdoor summer league. Jordan Kopac, the owner of Championship, was also the owner of a separate company, JFK2, LLC. In September 2008, Kopac entered into discussions with Robert Lowe, one of the owners of the Raptors. These discussions led to JFK2, LLC, becoming a general partner of the Raptors for the 2009 season. Plaintiff had issued a workers’ compensation insurance policy to Championship that covered August 7, 2008, to August 7, 2009. Kopac testified that when he obtained the policy he had an interest only in the Wolfpack football team. The policy applied to injuries to employees of Championship. The policy provided that plaintiff would pay workers’ compensation benefits as required by the workers’ compensation law of Wisconsin. In August 2009, plaintiff filed a declaratory judgment action against defendants, Championship, the Raptors, and the Raptors Football Owners Club, LP, seeking a declaration that its policy issued to Championship did not provide coverage for defendants’ workers’ compensation claims for injuries suffered as players for the Raptors. The trial court denied defendants’ motion 78 | IDC 2014 SURVEY OF LAW
for summary judgment. The trial court determined that defendants were not employed by Championship and that defendants’ claims were not compensable under the Wisconsin Workers’ Compensation Act. Defendant’s appealed. The appellate court affirmed. Defendants’ employment contracts clearly specified that the Raptors, and not some other entity, was the employer. Nothing in the contracts pointed to any employment relationship with Championship. While there were some labels on the documents that referred to Championship, the court indicated those labels did not render the clear, plain, and ordinary language of the contracts ambiguous. Thus, there was no genuine issue of material fact regarding whether Championship was defendants’ employer. West Bend Mut. Ins. Co. v. Talton, 2013 Ill. App. 2d 120814, 997 N.E.2d 784 (App. Ct. 2013).
Taxi driver is not employee where dispatching company did not control his schedule or the use of claimant’s privately-owned vehicle Claimant, who worked as a taxi driver, was beaten in his cab by a passenger. He suffered a comminuted, depressed skull fracture that required surgical repair. He remained in the hospital for three or four days after the surgery and contended that even after the surgery (and up to the time of the arbitration hearing), he continued to suffer from headaches on a daily basis. An arbitrator found that the claimant was an independent contractor and not an employee at the time he was injured. Accordingly, the arbitrator denied benefits. The Commission affirmed. The court observed that at the hearing the claimant, testifying through an interpreter, said that he began driving a cab with the taxi company logo in 2000, that he leased a computer radio and credit card machine from the company for $500 per month, that he received dispatches regarding potential passenger fares through the computer in his car, that the taxi company retained ownership of the computer and the other equipment it leased to the claimant, and that the claimant owned his own car, which he operated as a cab and also used for personal reasons. Acknowledging that there was no rigid law for determining whether an employer-employee relationship existed, that the determination depended upon the facts in the particular case, the appellate court, noting prior court decisions, indicated particular weight should be given to the following factors in determining whether the employer has a right to control the manner in which the work is done: (1) whether the driver accepted radio calls from the company; (2) whether the driver had his radio and cab repaired by the company; (3) whether the vehicles were painted alike with the name of the company and its phone number on the
vehicle; (4) whether the company could refuse the driver a cab; (5) whether the company has control over work shifts and assignments; (6) whether the company requires that gasoline be purchased from the company; (7) whether repair and tow service is supplied by the company; (8) whether the company has the right to discharge the driver or cancel the lease without cause; and (9) whether the lease contains a prohibition against subleasing the taxicab. The court indicated that in this case, the majority of these factors suggested that the taxi company did not control the manner in which the claimant performed his work. He was not required to accept a dispatched order. The taxi company owned no cabs; its business was primarily to provide a subscription service that allowed independent vehicle owners to access a customer base. The claimant was free to drive and work wherever and whenever he liked, and the taxi company exerted no control over the claimant’s work schedule or his use of the vehicle. Under these circumstances, the Commission’s finding that the claimant failed to prove an employment relationship was not against the manifest weight of the evidence. Guzauskas v. Illinois Workers’ Comp. Comm’n, 2014 IL App (1st) 123314WC-U (unpublished) (Feb. 10, 2014).
Repetitive Trauma Sufficient evidence supported determination of claimant’s manifestation date in repetitive injury case The court held that the Commission’s finding that the claimant sustained accidental injuries that arose out of and in the course of his employment was not against the manifest weight of the evidence where there was medical testimony that the claimant’s work duties were the single most contributing factor to the worsening of his preexisting condition. The court also observed that in repetitive trauma cases, the recognition of a manifestation date allows an employee to be compensated for injuries that develop gradually, without requiring the employee to push his body to a precise moment of collapse. Because repetitive-trauma injuries are progressive, the employee’s medical treatment, the severity of the injury, and how the injury affects the employee’s performance are all relevant in determining objectively when a reasonable person would have plainly recognized that injury and its relation to work. The court will not penalize an employee who diligently worked through progressive pain until it affected his ability to work and required medical treatment. Here the Commission determined that the claimant’s manifestation date was January 18, 2010, the date he saw a physician for low back and
hip pain and the doctor restricted him from heavy lifting, bending, walking, or standing for long periods of time. The claimant testified that his back became irritated in 2009. He took time off in December 2009, but when he returned to work, his back continued to get progressively worse. The claimant testified that following his 2004 back surgery, he was able to return to his regular full duty job and perform all his job duties. It was not until January 2010 that his back pain affected his ability to work and required medical treatment. There was sufficient evidence in the record to support the Commission’s determination that January 18, 2010, was the manifestation date of the claimant’s injury. Rockford Park Dist. v. Illinois Workers’ Comp. Comm’n, 2014 IL App (2d) 121286WC-U (unpublished) (Feb. 21, 2014).
Claimant’s repetitive trauma claim fails when Commission finds all of the medical experts lack knowledge of her work activities Claimant sought workers’ compensation benefits regarding an alleged repetitive-trauma injury to both hands and arms. At the time of her injury, she had been employed by the employer for 33 years. Her job duties included typing, handling documents, using a hole punch, handling medical charts, pushing a cart, and medical transcription. She handled files of various sizes (some weighing over 30 pounds). Subsequently, two physicians indicated claimant’s condition was causally related to her employment; two others said it was not. The Commission denied claimant’s request for benefits, finding none of the doctors had sufficient evidence regarding her work activities to form a reliable causation opinion. On appeal, claimant argued that one of the employer’s experts’ testimony should have been barred because of a Petrillo violation and further, that the Commission’s decision regarding causation was against the manifest weight of the evidence. The appellate court disagreed. As to causation, the court noted the burden was on the claimant to show the connection. While both of claimant’s experts opined that a causal connection existed between claimant’s condition of ill-being and her employment, Claimant ignored the fact that the Commission had found that there was a “lack of evidence “ related to the testimony of all four experts. The court said that claimant’s argument never came to terms with the Commission’s rejection of her experts’ testimony based on their lack of knowledge of claimant’s work activities. As to the Petrillo argument, the court observed that under Petrillo, ex parte communications between defense counsel and a plaintiff’s treating physician are generally prohibited. The court indicated the — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) issue was moot, however. The physician’s testimony as to causation did not need to be stricken; it had already been disregarded by the Commission. Remanding to the Commission to strike the physician’s testimony and reconsider its decision would be a pointless exercise. The court concluded that claimant’s argument concerning an alleged Petrillo violation was moot, and the Commission’s decision that claimant failed to prove her condition of ill being was causally related to her employment was not contrary to the manifest weight of the evidence. Hagaman v. Illinois Workers’ Comp. Comm’n, 2014 IL App (3d) 130249WC-U (unpublished) (June 23, 2014).
Average Weekly Wage AWW should not include self-employed income from piano lessons offered in claimant’s home The Illinois appellate court held that the state’s Workers’ Compensation Commission incorrectly calculated the claimant’s average weekly wage under 820 ILCS 305/10 by including profits from claimant’s self-employment—providing piano lessons in her home. The court indicated that those amounts did not represent wages earned while working for an employer, citing Larson’s Workers’ Compensation Law and Paoletti v. Industrial Comm’n, 279 Ill. App. 3d 988, 996, 665 N.E.2d 507, 512, 216 Ill. Dec. 447 (1996), in which the court excluded income that a claimant earned working as a refuse scavenger. Mansfield v. Illinois Workers’ Comp. Comm’n, 2013 Ill. App (2d) 120909WC (Nov. 21, 2013).
Choice of Physician Claimant’s choice of treatment did not exceed the two-physician choice limitation where one chain of medical care was a referral by the employer and another chain was for a bona fide emergency The Court held that Claimant’s choice of treatment did not exceed the two-physician choice limitation where one chain of medical care was a referral by the employer and another chain was for a bona fide emergency. The Court found, however, that the Commission’s
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finding that claimant was entitled to 32–4/7 weeks of temporary total disability benefits was against the manifest weight of the evidence as the evidence failed to establish that claimant was unable to work during part of the period for which TTD benefits were awarded. ASG Staffing, Inc. v. Illinois Workers’ Comp. Comm’n, 2013 IL App (3d) 121007WC-U (unpublished) (Dec. 17, 2013).
Medical Care While medical provider may not recover value of services above fee schedule for covered expenses, it may collect from injured worker those charges that are deemed not compensable An employee suffered a work-related injury and filed a workers’ compensation claim. He sought and received treatment from a chiropractor’s office. The employee and the employer later entered into a lump sum settlement agreement whereby the employer agreed to pay, among other benefits, the medical expenses incurred by the employee, subject to the fee schedule set forth in the workers’ compensation statute. The chiropractor subsequently filed a small claims complaint against the employee to collect the balance of fees charged. The trial court found in favor of the chiropractor and ordered the employee, as defendant, to pay $2,125. The employee appealed. The appellate court reversed, in substantial measure. It held that 820 ILCS 305/8.2(e–20) (2010) did not allow the chiropractor to recover for compensable services in excess of the fee schedule. It did, however, allow the chiropractor to recover for services that were deemed to be not compensable. Payment for services deemed not covered or not compensable under the Workers’ Compensation Act was the responsibility of the employee unless the provider and employee had agreed otherwise in writing. The chiropractor had provided $200 in non-compensable ice packs to the employee. It could recover that sum from the employee. Tiburzi Chiropractic v. Kline, 2013 IL App (4th) 121113, 996 N.E.2d 1164 (App. Ct. 2013).
Temporary Total Disability Grandmother’s light “work” around family flower shop did not mean she had ability to return to work Claimant’s presence at a flower shop she co-owned with her daughters did not constitute a “return to work” or absolve her employer of its liability to pay TTD benefits for relevant periods of time held the Illinois appellate court. Evidence that claimant, a licensed practical nurse at the time of her workrelated injury, owned a 53% stake in the business, went to the flower shop several days per week, sometimes answered the phone and helped her daughters by getting flowers for them and performing babysitting services for her grandchildren did not mean her condition had necessarily stabilized. While in some sense, her activities at the flower shop could be characterized as “work,” it was not the ability to do a few chores or activities that meant she was fully capable of returning to the workplace. She testified she does not do anything more physically taxing at the flower shop than she would do at her home during this period of time. The Commission’s decision that she had not returned to work was not against the manifest weight of the evidence. Sunny Hill of Will County v. Illinois Workers’ Comp. Comm’n, 2014 IL App (3d) 130028WC (June 26, 2014).
Settlements Appellate court remands matter for further hearing where settlement agreement was “sloppy” and “imprecise” Characterizing the language of a workers’ compensation settlement agreement that included a provision for a Medicare set-aside annuity (MSA) as “sloppy” and “imprecise” and quoting novelist Vladimir Nabokov’s advice to writers, “have the precision of a poet,” the Illinois appellate court reversed a trial court’s determination that an employer was to pay the injured employee the sum of $400,000 in addition to the amount of the MSA. Refusing, however, to read the agreement in the manner suggested by the employer, the court held that the language was patently ambiguous and that the case must be remanded for an evidentiary hearing to determine what the parties had actually intended. In the first sentence of the settlement agreement, the employer agreed to pay (and the employee accept) a lump sum payment of $400,000 plus payment of a MSA in annuity
form. The court indicated this sentence buttressed the employee’s argument that something in addition to the $400,000 was to be paid. On the other hand, a chart located at another point within the agreement purported to set out the amount owed by the employer and the amount that would be deducted therefrom for attorney’s fees and other costs. That chart indicated the “total amount” of the settlement was $400,000. This chart supported the employer’s argument. The parties had also attached a social security rider that appeared to support the employee’s contention that something in addition to the $400,000 was owed. The difficulty, as noted by the appellate court, was that if something more was owed, the agreement did not actually specify the amount owed. Reiterating that “[p]recision is important in writing,” the appellate court concluded that the ambiguous wording required an evidentiary hearing. Accordingly, the trial court’s holding was reversed and the case remanded. Paluch v. United Parcel Serv., 2014 IL App (1st) 130621 (Mar. 26, 2014).
Wage-Differential Benefits Where record was silent as to whether claimant waived right to wage-differential benefits, Commission should have considered the issue Affirming in part and reversing in other part a decision by the Workers’ Compensation Commission, the court held that the Commission’s finding that a claimant was not permanently totally disabled under a medical or an odd-lot theory was not against the manifest weight of the evidence as a functional capacity evaluation showed the claimant was able to perform at a sedentary physical demand, the level of work at which his own doctor had released him. His contention that he could not work at all was contradicted by the fact that the Commission found claimant’s experts’ opinions to be unpersuasive. Moreover, evidence of several suitable sedentary positions was presented. The claimant’s job search was suspect as he had only applied to companies that were not hiring. The court noted, however, that the Workers’ Compensation Act provided for two distinct types of compensation: Section 8(d)(1) involves a wage-differential award (820 ILCS 305/8(d)(1), and section 8(d)(2) involves a percentage-of-the-person-as-a-whole award (820 ILCS 305/8(d)(2).. The supreme court has expressed a preference for wage-differential awards over scheduled awards. As a general matter, section 8(d)(2) applies to those cases in which a claimant suffers injuries that partially incapacitate him from pursuing the usual and — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) customary duties of his line of employment, but do not cause him to suffer an impairment of earning capacity. Section 8(d)(2) may also apply in circumstances where a claimant suffers an impairment of earning capacity but waives his right to recover under section 8(d)(1). Nothing in the record suggested that the claimant explicitly waived his right to a wage differential award. The court indicated the Commission was obliged to resolve the question, especially in the face of the claimant’s petition requesting such alternate relief. The court, therefore, reversed that portion of the circuit court’s judgment that confirmed the Commission’s award of PPD benefits for 35% loss of use of a person as a whole. It also vacated the Commission’s PPD award, and remanded the matter to the Commission with directions to decide the claimant’s entitlement to a wage differential award on the merits. The court also indicated that it was not instructing the Commission on the conclusion it should reach on remand, only that it should decide the issue. Levato v. Illinois Workers’ Comp. Comm’n, 2014 IL App (1st) 130297WC (June 30, 2014).
Evidence; Admissibility Appellate court will not reweigh the evidence, including the expert medical evidence offered by the parties Repeating the rule that the appellate court cannot substitute its judgment for that of the fact finder, the court held that an award of non-duty liability to the former firefighter was proper because she was required to prove that an on-duty incident either caused or aggravated her preexisting condition and the appellate court was unable to say that there was not sufficient evidence for the Board of Trustees to make a finding that an on-duty incident did not cause or aggravate her preexisting condition resulting in her disability. The board properly found that she failed to prove that the on-duty incidents were a causative factor leading to her disability. It was apparent that the medical evidence was divided on the issue of causation, and the Board chose to believe the opinions of two doctors rather than the opinions of the remaining doctors; that conclusion was not against the manifest weight of the evidence. Carrillo v. Park Ridge Firefighters’ Pension Fund, 2014 IL App (1st) 130656, 6 N.E.3d 782 (App. Ct. 2014).
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Commission allowed to consider claimant’s work activities performed more than three years prior to the filing of a repetitive trauma claim Workers’ Compensation claimant filed a repetitive trauma claim alleging a gradual injury to her shoulder. At trial, the claimant testified to her job duties over her 38 year career with the employer. The employer objected to any testimony concerning the claimant’s job duties performed more than three years prior to the filing of the Application for Adjustment of Claim. The employer relied upon §6(d) of the Act which sets forth a three year statute of limitations for the filing of Workers’ Compensation claims. The employer argued the section of the Act also provided an evidentiary limitation precluding evidence of any job duties for more than three years before the filing of the claim. The Arbitrator and the Commission considered
The question presented was whether §6(d) of the Act barred the presentation of evidence of work activities which took place more than three years prior to the date of accident or manifestation date of a repetitive trauma injury. The appellate court held §6(d) of the Act does not provide any evidentiary limitation.
the testimony of the claimant’s job duties throughout her entire career. However, the circuit court reversed the Commission’s decision and remanded the matter to the Commission with instructions to reconsider the case but to exclude any consideration of evidence involving the claimant’s job duties from more than three years prior to the filing of the Application. The circuit court subsequently granted a motion to certify the question for an interlocutory appeal. The question presented was whether §6(d) of the Act barred the presentation of evidence of work activities which took place more than three years prior to the date of accident or manifestation date of a repetitive trauma injury. The appellate court held §6(d) of the Act does not provide any evidentiary limitation. The court relied upon the plain language of the statute which does not include any reference to an evidentiary limitation. The section of the Act only
bars claims which are not filed within three years of an accident date or a manifestation date for a repetitive trauma claim. PPG Industries v. Illinois Workers’ Comp. Comm’n, 2014 Ill. App. 4th 130698WC, (September 30, 2014).
to a workplace exposure to the fungus causing histoplasmosis was contrary to the manifest weight of the evidence, as the claimant presented credible medical evidence that his workplace environment caused him to contract histoplasmosis and that his conditions of ill-being were caused by a lung infection.
Jurisdiction
Tolbert v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130523WC (June 5, 2014).
COPD claim was untimely because not filed within 3-year statute of limitations; rebuttable presumption of pneumoconiosis did not help since no evidence pointed to that condition
Commission did not have jurisdiction over the alleged breach of an attorney’s referral agreement section 16a(J) of the Workers’ Compensation Act does not apply
The appellate court held that a workers’ compensation claim filed by a coal miner diagnosed with chronic obstructive pulmonary disease (COPD) was untimely because it was not filed within the three-year statute of limitations in 820 ILCS 310/6(c) (2008) for claims alleging occupational diseases. The five-year limitations period for pneumoconiosis claims was inapplicable because it did not encompass other respiratory diseases like COPD that could be caused in part by exposure to coal dust. The court indicated the rebuttable presumption of pneumoconiosis in 820 ILCS 310/1(d) (2008) did not aid the claimant because it applied only to deceased coal miners and because there was medical testimony that the claimant did not have pneumoconiosis. The claimant’s equal protection argument, first raised in a motion for reconsideration before the circuit court, was forfeited because it was not raised in the administrative proceedings. Carter v. Illinois Workers’ Comm’n, 2014 IL App (5th) 130151WC (June 9, 2014).
Notice to employer held sufficient where evidence indicated employer knew of claimant’s exposure to fungus causing histoplasmosis within 45 days of event The appellate court held that the Commission’s finding that claimant did not give sufficient notice under 820 ILCS 305/6(c) (2010) was contrary to the manifest weight of the evidence, as within 45 days of the claimant’s accident, i.e., exposure to fungus causing histoplasmosis, his employer was aware that the claimant was suffering from chest and lung issues, knew that the claimant was working in dusty conditions, and knew that his doctors did not want him working around dust. The court also indicated the Commission’s conclusion that the claimant’s conditions of ill-being were unrelated
In an action to recover the fees plaintiff law firm was owed pursuant to a referral agreement under which defendant attorney was to represent two workers’ compensation claimants before the Workers’ Compensation Commission and plaintiff was to perform other services, including document preparation, interviews, and translation services, the trial court properly rejected defendant’s contention that the claim should have been filed with the Commission, not in the trial court, and awarded plaintiff 45% of the fees recovered according to the referral agreement, notwithstanding the language of section 16a(J) of the Workers’ Compensation Act suggesting that all disputes regarding attorney fees shall be resolved by the Commission, since the statute was referring to the fees of those representing claimants before the Commission, not the breach of a referral agreement such as the agreement at issue in the instant case where plaintiff did not represent the claimant before the Commission, but performed ancillary tasks, not services in connection with the Act. Ferris, Thompson, and Zweig, Ltd. v. Esposito, 2014 IL App (2d) 130129, 4 N.E.3d 1126 (App. Ct. 2014). Petition for Leave to Appeal to Illinois Supreme Court granted May 28,2014).
Candidate fire paramedic was not “duly appointed member” of city fire department and should, therefore, recover any benefits pursuant to the Workers’ Compensation Act and not the Pension Code The appellate court held that a claimant was not precluded from benefits under 820 ILCS 305/1(b)(1) (2008) of the Workers’ Compensation Act, 820 ILCS 305/1 et seq. (2008), because at the — Continued on next page
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Survey of 2014 Tort Law Cases (Continued) time of his injury, the claimant was not a “duly appointed member” of a city fire department but rather, he was merely a candidate fire paramedic in training; the denial of his claim for duty disability benefits under 40 ILCS 5/6–151 of the Pension Code did not bar his workers’ compensation claim under res judicata because all the elements of that doctrine were not met; however, collateral estoppel barred some of the claims because the pension board had already adjudicated the issues of whether he was disabled after a set date and whether his injuries rendered him unable to work as a paramedic after that date. City of Chicago v. Illinois Workers’ Comp. Comm’n, 2014 IL App (1st) 121507WC, 4 N.E.3d 158 (App. Ct. 2014).
Insurer may not intervene after a section 19(b) award where the insurer was not a party to the proceedings The claimant filed an application for adjustment of claim pursuant to the Act, seeking benefits from the employer for repetitive trauma injuries suffered to his hands, elbows, and upper extremities. The claimant named only himself and the employer–and not the insurer–as parties in the application. The insurer did not participate in the hearing before the arbitrator. Following the arbitrator’s award of benefits to the claimant, the insurer filed two motions with the Commission: a petition for review of the arbitrator’s decision before the Commission and, a request that the insurer be added as a party in the workers’ compensation case. The Commission granted the employer’s request to be added as a “named party” in the case. On appeal, the appellate court reversed, finding that neither case law nor section 4(g) of the Act allows an insurer to intervene after a section 19(b) award where the insurer was not a party to the proceedings and the employee brought the claim against the employer alone. QBE Ins. Co. v. Illinois Workers’ Comp. Comm’n, 2013 IL App (5th) 120336WC, 993 N.E.2d 1090 (App. Ct. 2013).
No jurisdiction where “last act” giving validity to employment contract was in Alabama, not Illinois Claimant filed an application for adjustment of claim under the Workers’ Compensation Act (the Act) seeking benefits for a leg injury which he allegedly sustained while working for the employer. After conducting a hearing, the arbitrator found that it lacked jurisdiction because the claimant’s contract for hire was formed in Alabama, not Illinois. The claimant appealed the arbitrator’s decision
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to the Commission, which unanimously affirmed and adopted the arbitrator’s decision. The claimant then sought judicial review of the Commission’s decision in the circuit court, which confirmed the Commission’s ruling. Claimant, a truck driver, resided in Illinois. The employer is a trucking company in Alabama. At the time of hiring, claimant called the employer in Alabama and spoke with one of the driver recruiters. Claimant subsequently completed some paper work and mailed it back to Alabama from his home in Illinois. Claimant testified that, after the employer received his completed job application, the recruiter called the claimant at his home in Illinois and told him that the employer would like the claimant to come to work. According to the claimant, the recruiter told him that the employer had determined that his driving record was good and asked him “when [he] wanted to come to orientation.” The claimant testified that he told the recruiter that he had not made up his mind whether he was going to work for the employer because he was happy at his current job. However, after discussing the matter with his wife, the claimant called the recruiter a few months later from his home in Illinois and told him that he would “give [the employer] a try.” Claimant testified that during the call, he spoke with a representative of the employer who welcomed him. During the orientation process in Alabama, however, the claimant completed and signed an “Application Information Form” that had been prepared by the employer. Among the provisions of the document were a statement that a criminal record check, a driving test, a drug test and other matters had to be successfully completed before an employment arrangement would exist. The arbitrator ruled that Illinois had no jurisdiction over the claimant’s claim because the “last act” giving rise to the employment contract occurred in Alabama. The arbitrator found that it was “clear from the testimony that the hiring process involved a written job application, verification by claimant’s of over-the-road truck driving experience and background information, and most importantly, completing orientation week. The appellate court said it could not say that the Commission’s conclusion that the claimant’s contract for hire was made in Alabama was against the manifest weight of the evidence. The testimony supported the inference that claimant’s employment was completed in Alabama, not Illinois. Based upon the evidence presented, the Commission could reasonably have inferred that completing orientation and passing the required tests were conditions precedent to the parties’ obligations under the employment contract, and therefore, that the “last act necessary to give validity to the contract” occurred where those required actions took place (i.e., in Alabama). Dhermy v. Illinois Workers’ Comp. Comm’n, 2013 IL App (4th) 130011WC-U (unpublished) (Nov. 8, 2013).
Sanctions Former employee and attorney sanctioned under Supreme Court Rule 137 for making false statements in the verified complaints alleging retaliatory discharge Coppert (plaintiff) filed a retaliatory discharge suit claiming that he was fired for exercising his workers’ compensation rights. The employer filed a motion for summary judgment, arguing that plaintiff was fired for committing an assault on a fellow employee. The trial court granted the employer’s summary judgment motion and entered an order sanctioning both plaintiff and his attorney, Smith, under Supreme Court Rule 137, for making false statements in the verified complaints. Although the court rejected the employer’s request for payment of all its fees in defending the action, it imposed sanctions of $3,500 against plaintiff and $1,500 against Smith, and further ordered plaintiff and Smith’s law firm to jointly pay the employer $8,965 for the fees it incurred in prosecuting a motion for sanctions. Plaintiff and Smith appealed and the employer cross-appealed on various issues. The court indicated that the undisputed evidence established that the employer fired plaintiff due to an assault that he committed on another employee, that the victim and two witnesses corroborated the assault, and that, more importantly, plaintiff admitted that he grabbed the victim’s shirt and moved him aside. It was also undisputed that the employer, as part of its collective bargaining agreement with the Union, had a work rule that established “physical assault” of another employee as an offense that subjected an employee to discharge. Although plaintiff was arrested but apparently was not convicted, his termination was upheld by an arbitration panel and plaintiff was denied unemployment benefits based on the nature of his termination. The court noted that the employer had also established that, both before and after plaintiff filed his workers’ compensation claim, defendant compiled an impressive record of disciplinary notices and warnings. The appellate court found that, in sum, plaintiff failed to establish one incident that would support the validity of his allegations. Accordingly, because plaintiff failed to present a factual basis which would arguably entitle him to judgment, the trial court correctly entered summary judgment in the employer’s favor. The court affirmed that part of the judgment granting summary judgment in favor of the employer and against plaintiff and the judgment finding both plaintiff and his attorney violated Rule 137. The court agreed, however, that the trial court abused its discretion to the extent that it awarded sanctions without determining whether the amount assessed arose out of the sanctionable conduct. Accordingly, it vacated that part of
The court noted that the employer had also established that, both before and after plaintiff filed his workers’ compensation claim, defendant compiled an impressive record of disciplinary notices and warnings.
the judgment imposing fees, and remanded the cause for further proceedings to determine the amount of reasonable attorney fees and costs, if any, that defendant may have incurred as a result of the filing of the false pleadings, including the amount, if any, for prosecuting the Rule 137 motion. Coppert v. Cassens Trans. Co., 2014 IL App (2d) 120877-U (unpublished) (Apr. 23, 2014).
Appeals “Mailbox Rule” applies to appeals from Commission to Circuit Courts Reversing a decision of the state appellate court that had vacated the judgment of the circuit court as having been entered without subject matter jurisdiction because the claimant’s action for judicial review had been filed more than 20 days after the claimant’s attorney received the Commission’s decision, a divided Supreme Court of Illinois held that the “mailbox rule” applied to such appeals; it should be considered filed in the circuit court when placed in the mail, not when it was actually received by the court. Accordingly, since all required documents were mailed to the clerk by the 20th day after receipt of the Commission’s decision by claimant’s attorney, jurisdiction vested with the circuit court. Gruszeczka v. Illinois Workers’ Comp. Comm’n, 2013 IL 114212, 992 N.E.2d 1234 (2013).
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In figuring 20-day appeal to circuit court deadline, 820 ILCS 305/19.1 excludes the first day and includes the last day (unless Saturday, Sunday, or holiday) Claimant, a salad preparation chef, filed two applications for adjustment of claim alleging separate injuries to her left upper extremity on November 15, 2004 and September 22, 2005. The applications were consolidated. Following a decision from the Commission, claimant established compliance with all steps necessary to commence statutory review in the circuit court of the Commission’s decision within the statutory 20-day period. Accordingly, the order of circuit court granting respondent’s motion to dismiss claimant’s appeal would be reversed and the cause would be remanded for further proceedings. The arbitrator awarded claimant some amounts of TTD and PPD benefits. Claimant appealed to the Commission and the Commission affirmed. The Commission fixed the probable cost of preparing the record of proceedings at $35. Claimant received the Commission’s decisions on March 21, 2013. On April 10, 2013, claimant paid $35 to the Commission for preparation of the record on appeal and received a receipt for the payment. Also on April 10, 2013, claimant filed a written request for summons with the circuit court. The employer filed a motion to dismiss, asserting that claimant failed to comply with all of the steps necessary to commence review in the circuit court. In particular, respondent argued that claimant (1) failed to initiate the appeal process within 20 days after receiving notice of the Commission’s decision and (2) failed to exhibit to the circuit court proof of payment of the probable cost of the record. The trial court granted the employer’s motion to dismiss. That same day, claimant filed pro se a notice of appeal to this court. Claimant contended that she complied with the appeal requirements, noting that she received notice of the Commission’s decisions on March 21, 2013, and commenced judicial review within 20 days of that date, when, on April 10, 2013, she filed in the circuit court a request for summons. Claimant further contended that the record contained a copy of the receipt she obtained from the Commission for the probable cost of the record. As such, she argued that the circuit court erred in granting respondent’s motion to dismiss. The employer countered that the statute of limitations for filing a judicial review of the Commission’s decisions expired on April 9, 2013, but claimant did not file her request for summons in the circuit court until April 10, 2013, or 21 days after receipt of the Commission’s decisions. The employer further argued that although a receipt from the Commission for the probable cost of preparing the record was included in the record, there was no evidence that this receipt was filed prior to the issuance of the summons. The appellate court stated that in calculating the 20-day statutory period, the employer 86 | IDC 2014 SURVEY OF LAW
[S]ection 19.1 of the Act (820 ILCS 305/19.1), excluded the first day from the count. The record clearly established, therefore, that claimant had filed her request for summons in the circuit court in a timely manner.
counted March 21, 2013, the day claimant received notice of the Commission’s decision. However, section 19.1 of the Act (820 ILCS 305/19.1), excluded the first day from the count. The record clearly established, therefore, that claimant had filed her request for summons in the circuit court in a timely manner. The court also found that under the circumstances, claimant had established that she exhibited to the clerk of the circuit court proof of payment of the probable cost of the record prior to the issuance of summons. Crowder v. Illinois Workers’ Comp. Comm’n, 2014 IL App (1st) 131819WC-U (unpublished) (Apr. 14, 2014).
Dual Capacity “Dual Capacity/Persona” tort action related to private aircraft crash fails Applying the state’s two-prong test to determine if the “dual capacity doctrine” could be utilized as an exception to the exclusive remedy provisions of the Illinois Workers’ Compensation Act, the state appellate court held that the surviving spouse of a deceased Morgan Stanley employee killed in a private aircraft crash could not maintain a wrongful death action against Morgan Stanley or the estate of a co-employee who had been piloting the plane at the time of the crash based on that theory. Quoting this Treatise and citing Ocasek v. Krass, 153 Ill. App. 3d 215, 505 N.E.2d 1258, 106 Ill. Dec. 467 (1987), the court indicated that “the mere fact that the employer, as an individual, pilots an airplane, drives a car, or performs such other functions which impose upon him the duty to exercise due care, does not serve to endow him with a second legal persona so completely independent from and unrelated to his status as an employer.” Garland v. Morgan Stanley & Co., 2013 IL App (1st) 112121, 996 N.E.2d 188 (App. Ct. 2013).
Exclusive Remedy “Traveling Employee” Rule Relates to Comp Cases Only; May Not Be Extended to Tort Law An Illinois appellate court held that workers’ compensation law’s “traveling employee” doctrine may not be extended into the tort law arena so as to support a claim that an employer was liable, upon respondeat superior grounds, for the alleged negligence of a “traveling employee” who caused a fatal vehicular accident while driving to the work site. Acknowledging that the employee, who was also killed in the accident, would likely have been classified as a “traveling employee” in any workers’ compensation claim filed by the employee’s family, the court reasoned that the purpose of the Workers’ Compensation Act was to provide financial protection for employees who incur broadly defined work-related injuries without generally determining the issue of fault. The same could not be said for respondeat superior cases. In the tort action, employer fault was an important component. Finding a sufficient work-connectedness to allow workers’ compensation benefits was one thing; the same process could not be used within the tort arena. Pister v. Matrix Serv. Industrial Contractors, Inc., 2013 IL App (4th) 120781, 998 N.E.2d 123 (App. Ct. 2013).
Exclusive remedy defense does not apply where former employee contracted asbestos-related disease after the expiration of relevant statutes of repose In a case of first impression, the appellate court, reversing a decision by a state trial court, ruled that neither the exclusive remedy provisions of the Illinois Workers’ Compensation Act (“the Act”) nor those of the Workers’ Compensation Diseases Act (“the Diseases Act”) bar a former employee from maintaining a civil action against the former employer where the employee became aware he had contracted the occupational disease–here asbestosis–after the expiration of the statute of repose under those acts. The former employee, who was diagnosed with peritoneal mesothelioma 41 years after leaving the employ of Ferro Engineering, could not pursue an asbestos-related workers’ compensation claim because the claim was time-barred by the Act’s 25-year statute of repose for asbestos-related injuries and the three-year statute of repose for asbestos-related diseases under the Diseases Act. Plaintiff, citing Meerbrey v. Marshall
Field & Co., Inc., 139 Ill. 2d 455, 467 (1990), argued that the exclusive remedy provisions did not bar the civil action, since the provisions do not apply to claims that are “not compensable under the Act.” Noting that other jurisdictions had allowed such civil actions to proceed under these circumstances and that defendant had not “pointed to any absurd or otherwise problematic consequences resulting therefrom,” the court indicated its holding was “confined to the specific fact pattern” before the court: where an injured employee’s potential claim under the Act was time-barred before he or she ever learns of it, thus necessarily depriving him of any potential for compensation under the Act. Folta v. Ferro Eng’g, 2014 IL App (1st) 123219 (June 27, 2014). Petition for Leave to Appeal to Illinois Supreme Court granted September 24, 2014.
Retaliatory Discharge Collateral estoppel does not bar retaliatory discharge action where plaintiff also sought social security disability determination Plaintiff filed a complaint against various defendants, including her former employer, alleging, inter alia, breach of contract and retaliatory discharge. A jury eventually awarded plaintiff $150,000 in damages on her breach of contract claim, and $50,000 on her retaliatory discharge claim. On appeal, the employer contended that the trial court erred in: (1) holding that the collateral source rule prohibited defendants from asserting the affirmative defense of judicial estoppel; (2) denying its motion for a new trial or judgment n.o.v. because there was insufficient evidence of a breach of contract; and (3) barring defendant from offering evidence of plaintiff’s failure to mitigate damages when it later instructed the jury that it was defendants’ burden to prove mitigation. The appellate court affirmed, holding in pertinent part that the collateral source rule was properly applied where plaintiff’s retaliatory discharge claim was based only on her allegation that she was terminated for filing a workers’ compensation claim and her social security disability claim would not judicially estop that claim, and defendant never presented any evidence that the basis for discharging plaintiff was due to her inability to work. Batson v. The Oak Tree, Ltd., 2013 IL App (1st) 123071, 2 N.E.3d 405 (App. Ct. 2013).
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Jury verdict against plaintiff in retaliatory discharge case was appropriate where evidence indicated plaintiff ignored a return to work release after talking with his attorney and that he could have avoided termination by following attendance policy call-in procedure Plaintiff appealed the jury verdict following an eight day trial that awarded judgment in favor of defendants, Safeway, Inc. and Dominick’s Finer Foods, L.L.C., on his claim of retaliatory discharge in violation of section 4(h) of the Worker’s Compensation Act (Act). Plaintiff filed a worker’s compensation claim on March 4, 2005, claiming he injured his back while working. Defendants approved his claim and paid plaintiff’s medical bills. Defendants also paid plaintiff temporary total disability benefits while plaintiff was off work. After plaintiff was off work for almost a year, defendants requested that plaintiff be examined by an orthopedic surgeon who concluded on May 25, 2006, that plaintiff could return to work. Thereafter, defendants included plaintiff on the work schedule. Plaintiff’s union knew he was on the work schedule. Plaintiff failed to call in, show up for work or exercise his rights to various leave options. The plaintiff’s union took no action despite being informed that plaintiff had failed to call in his absences. Plaintiff was terminated for attendance violations in June 2006. Plaintiff filed the retaliatory discharge complaint. The appellate court held that the trial court did not err in denying plaintiff’s motion for summary judgment. There was trial evidence presented that plaintiff was aware that he was placed on the work schedule. Two witnesses testified that plaintiff admitted that he knew he had been placed on the work schedule prior to his termination. A physician testified that stated that plaintiff “ignored” the release to return to work after talking to his attorney. The court added that uncontroverted trial evidence was presented that showed that the plaintiff could have avoided termination by simply following the attendance policy call-in procedure. Plaintiff had other options, including invoking the collective bargaining agreement’s provision between defendants and plaintiff’s union that would have allowed plaintiff an additional year of leave. Plaintiff testified that he was aware of his options to avoid termination. With all this in mind, the jury’s verdict in favor of the employers was not against the manifest weight of the evidence and the trial court correctly denied both plaintiff’s motion for a directed verdict and motion for judgment notwithstanding the verdict. The court affirmed the jury’s verdict. Grabs v. Safeway, Inc., 2013 IL App (1st) 121971-U (unpublished) (July 30, 2013).
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Federal District Court finds employer guilty of retaliatory discharge for requiring a Workers’ Compensation claimant to provide notice to supervisor before seeking medical care Plaintiff reported to his employer that he was experiencing pain in his back as a result of his job duties. The employer allowed Plaintiff to work in a light duty capacity. After working for several days, Plaintiff sought treatment with a medical professional who allowed Plaintiff to continue working in a light duty capacity. Plaintiff returned to work and at the conclusion of his shift, Plaintiff provided the work status note to the employer. Pursuant to a company policy which requires Workers’ Compensation claimants to provide notice to a supervisor before seeking medical treatment for a work injury, the employer terminated Plaintiff’s employment. Relying upon a provision of the Illinois Workers’ Compensation Act which indicates an employer may not interfere with an employee’s exercise of his rights under the Act, the district court held the termination was retaliatory and unlawful. The court further explained that imposing any prerequisite even if de minimus on an employee which must be satisfied before the employee seeks medical treatment constitutes an interference with the employee’s right to seek and obtain medical treatment. Therefore, the prerequisite is contrary to the provisions of the Workers’ Compensation Act. Stevenson v. FedEx Ground Package System, Inc., 2014 WL 4783053, Memorandum Opinion and Order US District Court, N.D. Illinois, Eastern Division (September 24, 2014).
Workers’ Compensation claimant may not recover lost wages through a retaliatory discharge claim when the loss in earnings was due to an inability to work secondary to on the job injuries A claimant sustained work injuries which were disputed by the employer. Based upon the dispute, the employer refused to authorize medical treatment as was recommended by the claimant’s physician. The claimant took a leave of absence through the FMLA, and upon the expiration of the time allowed, the employer terminated the claimant’s employment as the claimant was medically unable to return to work. The claimant filed a retaliatory discharge case in circuit court. He subsequently settled the Workers’ Compensation claim the terms of which included temporary total disability benefits, compensation for future medical expenses, and was considered a full and final
settlement of the claims resulting from the work-related accident. The employer filed a Motion for Partial Summary Judgment in the retaliatory discharge case with respect to the claimant’s request for damages for lost wages. The circuit court granted the request for partial summary judgment and certified two questions for an interlocutory appeal. The two questions focused on whether the Workers’ Compensation Act’s exclusivity provision bars an injured employee from recovering damages for lost wages in a retaliatory discharge lawsuit when the employee was unable to work as a result of the Workers’ Compensation carrier’s delay in approving medical treatment. The appellate court held the claim for lost wages fell within the exclusivity provisions of the Act. The appellate court further explained every natural consequence that flows from a work-related injury is compensable under the Workers’ Compensation Act. As such, the exclusivity provision of the Workers’ Compensation Act precludes the claimant from recovering under a retaliatory discharge case. Dale v. South Central Illinois Mass Transit District, 2014 IL App (5th) 130361, 17 N.E. 3d 229 (August 26, 2014.)
Guaranty Fund could not get reimbursement from borrowing employer’s workers’ compensation insurer In an action arising from the workers’ compensation benefits received by a loaned employee after the lending employer’s workers’ compensation insurer was liquidated, the appellate court found that the trial court properly dismissed the action filed by the Illinois Insurance Guaranty Fund seeking reimbursement from the borrowing employer’s workers’ compensation insurer for the benefits the Fund paid to the injured worker after the liquidation, because the liquidated insurer had no rights against the borrowing employer’s insurer that could have been passed to the Fund. Furthermore, due to the passage of time, any action the liquidated insurer could have had against the borrowing employer’s insurer would have expired. Illinois Ins. Guaranty Fund v. Liberty Mut. Ins. Co., 2013 Ill. App. 1st 123345, 1 N.E.3d 956 (App. Ct. 2013).
Guaranty Fund Statutory cap does not apply to Guaranty Fund payments related to excess comp coverage A divided Illinois Supreme Court held that a $300,000 cap on payment of individual claims related to obligations of insolvent carriers by the Illinois Insurance Guaranty Fund does not apply to excess coverage policies providing workers’ compensation protection to employers. By statute, 215 ILCS 5/537.2, the cap is inapplicable to “any workers compensation claims.” It was unquestioned that the cap did not apply to claims filed under policies providing primary workers’ compensation coverage. It was unclear, however, if the cap might apply to claims that were related to policies providing excess coverage. The majority concluded that the law made no reference to and did not differentiate between primary and excess coverage policies. In the instant case, therefore, the Fund improperly ended payments for a workers’ compensation award after the cap was reached. Skokie Castings, Inc. v. Illinois Ins. Guar. Fund, 2013 IL 113873, 998 N.E.2d 69 (2013).
About the Authors Justin K. Beyer is a partner with Seyfarth Shaw LLP in Chicago, who focuses his practice in the areas of product liability, complex commercial litigation, and trade secrets. Mr. Beyer represents companies in the agricultural, banking, construction, food processing equipment manufacturing, general manufacturing, healthcare, hospitality, pharmaceutical, medical device, transportation industries, and in cases involving alleged exposure to asbestos. Mr. Beyer has been a member of the IDC and its Tort Law Committee since 2010, serving as the Tort Law Committee Chairperson during the 2014–2015 year. R. Mark Cosimini is a partner in Rusin & Maciorowski, Ltd.’s Workers’ Compensation Department. He has been with the firm since 1997 and is the managing partner in the firm’s Champaign office. Mr. Cosimini is currently serving as the co-chair of the Workers’ Compensation Committee for the IDC and has served on the Workers’ Compensation Section Council for the ISBA. He has lectured at legal seminars and he frequently speaks with employers on issues relating to Workers’ Compensation matters.
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About the Authors (Continued) Erica S. Longfield is an associate attorney with Swanson, Martin & Bell, LLP. Her practice is focused in the areas of toxic tort litigation, asbestos litigation, and products liability, representing the interests of large corporations and insurance carriers in the defense and management of lawsuits in preparation for and at trial. Bradley C. Nahrstadt is a partner of Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd., is co-chair of the insurance coverage practice group, and a member of the product liability, professional liability, and tort defense practice groups. He focuses his practice on defending product liability, professional liability, premises liability, insurance coverage and bad faith, and commercial matters in state and federal courts. Mr. Nahrstadt received his J.D., cum laude, in 1992 from the University of Illinois College of Law. He has served as an adjunct professor of trial advocacy at DePaul University College of Law and for several years taught a course on litigation as part of the paralegal studies program at the College of Lake County and is the current Secretary Treasurer of the Illinois Association of Defense Trial Counsel.
court. Mr. Sullivan earned his B.B.A. in Accounting from the University of Notre Dame and his J.D. cum laude from Loyola University Chicago School of Law. Kenneth F. Werts is a member of the firm of Craig & Craig, LLC in Mt. Vernon. Admitted to the bar in Illinois, Mr. Werts focuses his practice on workers’ compensation law; black lung; occupational disease law; and personal injury litigation. He received his undergraduate degree from the University of Illinois and his law degree from Southern Illinois University. Prior to becoming the IDC President in 2010, Mr. Werts has served as the IDC Workers’ Compensation Committee Co-Chair, Employment Law Committee Co-Chair, and as a member of the Board of Directors. In addition to his work as a volunteer for the IDC, Mr. Werts is a member of the Jefferson County, Illinois State (Past Chairman, Workers’ Compensation Law Section Council) and American (Member, Workers’ Compensation and Employers’ Liability Law Committee, 2001–Present) Bar Associations; Defense Research Institute; Association of Defense Trial Attorneys; and the National Association of Railroad Trial Counsel.
tort law committee Justin K. Beyer, Chair
Cecil E. Porter, III of Litchfield Cavo LLP focuses his practice in the areas of construction litigation, toxic tort litigation, commercial litigation, employers’ liability, contractual disputes, auto liability, premises liability, and workers’ compensation. He has served as first and second chair of jury trials to verdict in private practice and while serving as a prosecutor. He has also served as first chair of many bench trials, arbitration hearings, and workers’ compensation appeals.Mr. Porter was listed as one of Illinois Super Lawyers Rising Stars® in 2011, 2012, 2013, and 2014. Brian R. Shoemaker is Corporate Counsel at State Farm Mutual Automobile Insurance Company. He practiced for six years in Cook County concentrating his practice in the defense of State Farm insureds in automobile and premises liability cases with Bruce Farrel Dorn & Associates. He is admitted to the Illinois Bar and the United States District Court, Northern District of Illinois, and is a member of the Northern District’s Trial Bar. He earned his undergraduate degree from the University of Illinois and his law degree from the John Marshall Law School. He is also a member of the Chicago Bar Association and contributing author to the CBA Tort Litigation Committee’s Tort Reporter. David J. Sullivan is a partner at Schuyler, Roche & Crisham, P.C. in Chicago. His practice includes the defense of nursing homes, medical professionals, intermodal trucking companies, and attorneys. Mr. Sullivan also handles product liability defense and general commercial litigation matters. He has successfully argued before the Illinois appellate
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Seyfarth Shaw LLP, Chicago 312-460-5957
[email protected]
Mandi Ferguson, Vice Chair Swanson, Martin & Bell, LLP, Edwardsville 312-321-3547
[email protected]
MEMBERS
Stephen R. Ayres Heyl, Royster, Voelker & Allen, P.C.
R. Mark Cosimini Rusin & Maciorowski, Ltd.
David R. Ganfield
R. Howard Jump Jump & Associates, P.C. Nathan Drew Kemp HeplerBroom LLC Erica S. Longfield Swanson, Martin & Bell, LLP Peter E. Naylor Brown, Hay & Stephens, LLP Gregory W. Odom HeplerBroom LLC James W. Ozog Goldberg Segalla LLP Cecil E. Porter, III Litchfield Cavo LLP
Robert H. Sands HeplerBroom LLC
Patrick W. Stufflebeam HeplerBroom LLC
Kenneth F. Werts Craig & Craig, LLC
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Survey of Law
Index of 2014 Cases
CIVIL PRACTICE 15th Place Condo. Ass’n v. S. Campus Dev. Team LLC, 2014 IL App (1st) 122292....................................................................................9 Armagan v. Pesha, 2014 IL App (1st) 121840............................................................................................................................................10 Burman v. Snyder, 2014 IL App (1st) 130772............................................................................................................................................11 Crawford Cnty. Oil, LLC v. Weger, 2014 IL App (5th) 130382..................................................................................................................11 Evanston Ins. Co. v. Riseborough, 2014 IL 114271....................................................................................................................................12 Federal Nat’l Mortg. Ass’n v. Tomei, 2014 IL App (2d) 130652................................................................................................................12 Folta v. Ferro Eng’g, 2014 IL App (1st) 123219............................................................................................................................13, 67, 87 Pirrello v. Maryland Acad., Inc., 2014 IL App (1st) 133964......................................................................................................................14 Seymour v. Collins, 2014 IL App (2d) 140100............................................................................................................................................15 Wilder Chiropractic, Inc. v. State Farm Fire & Cas. Co., 2014 IL App (2d) 130781................................................................................15
COMMERCIAL LAW Aliaga Med. Ctr., S.C. v. Harris Bank N.A., 2014 IL App (1st) 133645.....................................................................................................19 C. Szabo Contracting, Inc. v. Lorig Constr. Co., 2014 IL App (2d) 131328..............................................................................................18 Dohrmann v. Swaney, 2014 IL App (1st) 131524.......................................................................................................................................22 Rico Indus., Inc. v. TLC Grp., Inc., 2014 IL App (1st) 131522..................................................................................................................17 Rohr Burg Motors, Inc. v. Kulbarsh, 2014 IL App (1st) 131664................................................................................................................20 Saba Software, Inc. v. Deere & Co., 2014 IL App (1st) 132381.................................................................................................................18 Saletech, LLC v. E. Balt, Inc., 2014 IL App (1st) 132639...........................................................................................................................17
CONSTRUCTION LAW Fonseca v. Clark Constr. Grp., LLC, 2014 IL App (1st) 130308................................................................................................................25 Lederer v. Exec. Constr., Inc., 2014 IL App (1st) 123170...........................................................................................................................26 Lee v. Six Flags Theme Parks, Inc., 2014 IL App (1st) 130771..................................................................................................................24 Ramirez v. FCL Builders, Inc., 2014 IL App (1st) 123663.........................................................................................................................24
EMPLOYMENT LAW Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014)....................................................................................................................29 Dale v. S. Cent. Ill. Mass Transit Dist., 2014 IL App (5th) 130361............................................................................................................31 Harper v. Fulton County, Ill., 748 F.3d 761 (7th Cir. 2014).......................................................................................................................31 (Continued on page 95) IDC 2014 SURVEY OF LAW
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Job Opportunities for Qualified Applicants Act, Pub. Act 98-774 (codified at 820 ILCS 75/1 to 99).......................................................33 Lane v. Franks, 134 S. Ct. 2369 (2014)......................................................................................................................................................29 Michael v. Precision Alliance Grp., LLC, 2014 IL 117376........................................................................................................................28 Nat’l Labor Relations Bd. v. Noel Canning, 134 S. Ct. 2550 (2014).........................................................................................................34 Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338...............................................................................................35 Pregnancy Fairness Act, Pub. Act 98-1050 (codified in scattered sections of 775 Ill. Comp. Stat. ch. 5).................................................32 Purple Commc’ns, Inc. & Commc’ns Workers of Am., AFL-CIO, 361 NLRB No. 126 (2014).................................................................35 Sandifer v. U.S. Steel Corp., 134 S. Ct. 870 (2014)....................................................................................................................................33 Xylem Dewatering Solutions, Inc. v. Szablewski, 2014 IL App (5th) 140080-U (2014).............................................................................30
INSURANCE LAW Allstate Prop. & Cas. Ins. Co. v. Trujillo, 2014 IL App (1st) 123419........................................................................................................39 Am. Serv. Ins. Co. v. China Ocean Shipping Co. (Ams.) Inc., 2014 IL App (1st) 121895..........................................................................39 AMCO Ins. Co. v. Cincinnati Ins. Co., 2014 IL App (1st) 122856.............................................................................................................42 Argonaut Midwest Ins. Co. v. Morales, 2014 IL App (1st) 130745............................................................................................................47 Cent. Mut. Ins. Co. v. Tracy’s Treasures, Inc., 2014 IL App (1st) 123339..................................................................................................48 Certain Underwriters at Lloyd’s, London v. Abbott Labs., 2014 IL App (1st) 132020..............................................................................44 Certain Underwriters at Lloyd’s, London v. Cent. Mut. Ins. Co., 2014 IL App (1st) 133145....................................................................42 Fox v. Am. Alt. Ins. Corp., 757 F.3d 680 (7th Cir. 2014)............................................................................................................................45 G.M. Sign, Inc. v. State Farm Fire & Cas. Co., 2014 IL App (2d) 130593................................................................................................46 Gaudina v. State Farm Mut. Auto. Ins. Co., 2014 IL App (1st) 131264.....................................................................................................43 Hilco Trading, LLC v. Liberty Surplus Ins. Corp., 2014 IL App (1st) 123503...........................................................................................40 Huizenga v. Auto-Owners Ins., 2014 IL App (3d) 120937..........................................................................................................................38 John T. Doyle Trust v. Country Mut. Ins. Co., 2014 IL App (2d) 121238..................................................................................................41 Kim v. State Farm Mut. Ins. Co., 2014 IL App (1st) 131235......................................................................................................................45 Margulis v. BCS Ins. Co., 2014 IL App (1st) 140286.................................................................................................................................50 Mt. Hawley Ins. Co. v. Certain Underwriters at Lloyd’s, London, 2014 IL App (1st) 133931...................................................................48 Nautilus Ins. Co. v. Bd. of Dirs. of Regal Lofts Condo. Ass’n, 764 F.3d 726 (7th Cir. 2014).....................................................................46 Nelson v. Country Mut. Ins. Co., 2014 IL App (1st) 131036......................................................................................................................49 Pang v. Farmers Ins. Grp., 2014 IL App (1st) 123204...............................................................................................................................42 Pekin Ins. Co. v. Rada Dev., LLC, 2014 IL App (1st) 133947....................................................................................................................44 Perma-Pipe, Inc. v. Liberty Surplus Ins. Corp., 38 F. Supp. 3d 890 (N.D. Ill. 2014).................................................................................43 Powell v. Am. Serv. Ins. Co., 2014 IL App (1st) 123643.............................................................................................................................38 Rosalind Franklin Univ. of Med. & Sci. v. Lexington Ins. Co., 2014 IL App (1st) 113755........................................................................40 Safeway Ins. Co. v. Hadary, 2014 IL App (1st) 132554.............................................................................................................................50 St. Paul Fire & Marine Ins. Co. v. City of Zion, 2014 IL App (2d) 131312...............................................................................................49 (Continued on next page) IDC 2014 SURVEY OF LAW
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LOCAL GOVERNMENT LAW Ballard v. Chi. Park Dist., 741 F.3d 838 (7th Cir. 2014)............................................................................................................................54 Brooks v. McLean County Unit Dist. No. 5, 2014 IL App (4th) 130503.....................................................................................................52 Bruns v. City of Centralia, 2014 IL 116998..........................................................................................................................................53, 61 Carlson v. Chi. Transit Auth., 2014 IL App (1st) 122463...........................................................................................................................56 Fernandez v. California, 134 S. Ct. 1126 (2014)........................................................................................................................................54 Gurba v. Cmty. High Sch. Dist. No. 155, 2014 IL App (2d) 140098..........................................................................................................53 Malinksi v. Grayslake Cmty. High Sch. Dist. 127, 2014 IL App (2d) 130685............................................................................................52 Nelson v. Kendall County, 2014 IL 116303................................................................................................................................................56 Sage Info. Servs. v. Suhr, 2014 IL App (2d) 130708...................................................................................................................................55 Suchy v. City of Geneva, 2014 IL App (2d) 130367....................................................................................................................................55 Swain v. City of Chi., 2014 IL App (1st) 122769........................................................................................................................................52 Uptown People’s Law Ctr. v. Dept. of Corrections, 2014 IL App (1st) 130161..........................................................................................55 Vill. of Lake in the Hills v. Niklaus, 2014 IL App (2d) 130654...................................................................................................................56
TORT LAW Anderegg v. Ill. Workers’ Comp. Comm’n, 2014 IL App (4th) 130418WC-U............................................................................................ 73 Anderson v. Ill. Workers’ Comp. Comm’n, 2014 IL App (5th) 130186WC-U............................................................................................ 76 ASG Staffing, Inc. v. Ill. Workers’ Comp. Comm’n, 2013 IL App (3d) 121007WC-U................................................................................ 80 Batson v. The Oak Tree, Ltd., 2013 IL App (1st) 123071........................................................................................................................... 87 Blythe Holdings, Inc. v. DeAngelis, 750 F.3d 653 (7th Cir. 2014).............................................................................................................. 58 Brais v. Ill. Workers’ Comp. Comm’n, 2014 IL App (3d) 120820WC........................................................................................................ 74 Bruns v. City of Centralia, 2014 IL 116998.......................................................................................................................................... 53, 61 Carlson v. Chi. Transit Auth., 2014 IL App (1st) 122463........................................................................................................................... 69 Carrillo v. Park Ridge Firefighters’ Pension Fund, 2014 IL App (1st) 130656......................................................................................... 82 Carter v. Ill. Workers’ Comp. Comm’n, 2014 IL App (5th) 130151WC..................................................................................................... 83 Chraca v. U.S. Battery Mfg. Co., 2014 IL App (1st) 132325...................................................................................................................... 64 City of Chi. v. Ill. Workers’ Comp. Comm’n, 2014 IL App (1st) 121507WC............................................................................................. 83 Compass Grp. v. Ill. Workers’ Comp. Comm’n, 2014 IL App (2d) 121283WC.......................................................................................... 74 Coppert v. Cassens Trans. Co., 2014 IL App (2d) 120877-U..................................................................................................................... 85 Crowder v. Ill. Workers’ Comp. Comm’n, 2014 IL App (1st) 131819WC-U.............................................................................................. 86 Dale v. S. Cent. Ill. Mass Transit Dist., 2014 IL App (5th) 130361............................................................................................................ 88 Davis v. Kewanee Hosp., 2014 IL App (2d) 130304................................................................................................................................... 66 Dhermy v. Ill. Workers’ Comp. Comm’n, 2013 IL App (4th) 130011WC-U............................................................................................... 84 Donald W. Fohrman & Assocs., Ltd. v. Marc D. Alberts, 2014 IL App (1st) 123351................................................................................ 58 Ferris, Thompson, & Zweig, Ltd. v. Esposito, 2014 IL App (2d) 130129, aff’d, 2015 IL 117443............................................................. 83 96 | IDC 2014 SURVEY OF LAW
Folta v. Ferro Eng’g, 2014 IL App (1st) 123219, cert. allowed, 20 N.E.3d 1253 (Table)............................................................. 13, 67, 87 Freeman United Coal Mining Co. v. Ill. Workers’ Comp. Comm’n, 2013 IL App (5th) 120564WC......................................................... 75 Garland v. Morgan Stanley & Co., 2013 IL App (1st) 112121................................................................................................................... 86 Grabs v. Safeway, Inc., 2013 IL App (1st) 121971-U................................................................................................................................. 88 Gruszeczka v. Ill. Workers’ Comp. Comm’n, 2013 IL 114212.................................................................................................................... 85 Guzauskas v. Ill. Workers’ Comp. Comm’n, 2014 IL App (1st) 123314WC-U.......................................................................................... 78 Hacker v. Ill. Workers’ Comp. Comm’n, 2014 IL App (4th) 130199WC-U................................................................................................ 74 Hagaman v. Ill. Workers’ Comp. Comm’n, 2014 IL App (3d) 130249WC-U............................................................................................. 79 Hart v. Century 21 Windsor Realty, 2014 IL App (3d) 130667.................................................................................................................. 59 Hemminger v. LeMay, 2014 IL App (3d) 120392....................................................................................................................................... 64 Ill. Ins. Guar. Fund v. Liberty Mut. Ins. Co., 2013 IL App (1st) 123345.................................................................................................... 89 Klaine v. S. Ill. Hosp. Servs., 2014 IL App (5th) 130356............................................................................................................................ 67 Kurz v. Stanley Works, 2014 IL App (2d) 121429-U.................................................................................................................................. 62 Levato v. Ill. Workers’ Comp. Comm’n, 2014 IL App (1st) 130297WC..................................................................................................... 81 Lewis v. Heartland Food Corp., 2014 IL App (1st) 123303....................................................................................................................... 59 Loftis v. Ill. Workers’ Comp. Comm’n, 2014 IL App (2d) 130421WC-U................................................................................................... 76 (Continued on next page)
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2014 Survey of Law Index (Continued) Mansfield v. Ill. Workers’ Comp. Comm’n, 2013 IL App (2d) 120909WC................................................................................................. 80 Mathis v. Ill. Workers’ Comp. Comm’n, 2014 IL App (5th) 130301WC-U................................................................................................ 76 McDonald v. Lipov, 2014 IL App (2d) 130401........................................................................................................................................... 65 Meierdirks v. Ill. Workers’ Comp. Comm’n, 2014 IL App (1st) 130749WC-U.......................................................................................... 72 Nesbitt v. Nat’l Muscle Car Ass’n, 2014 IL App (1st) 130522-U............................................................................................................... 63 Paluch v. United Parcel Serv., 2014 IL App (1st) 130621.......................................................................................................................... 81 Parko v. Shell Oil Co., 739 F.3d 1083 (7th Cir. 2014)................................................................................................................................ 68 Pister v. Matrix Serv. Indus. Contractors, Inc., 2013 IL App (4th) 120781............................................................................................... 87 PPG Indus. v. Ill. Workers’ Comp. Comm’n, 2014 IL App (4th) 130698WC............................................................................................. 82 QBE Ins. Co. v. Ill. Workers’ Comp. Comm’n, 2013 IL App (5th) 120336WC.......................................................................................... 84 Rockford Park Dist. v. Ill. Workers’ Comp. Comm’n, 2014 IL App (2d) 121286WC-U............................................................................ 79 Ryan v. Glen Ellyn Raintree Condo. Ass’n, 2014 IL App (2d) 130682....................................................................................................... 60 Sasaki v. Ill. Workers’ Comp. Comm’n, 2014 IL App (1st) 131669WC-U................................................................................................. 73 Scoggins v. Ill. Workers’ Comp. Comm’n, 2014 IL App (5th) 130198WC-U............................................................................................. 71 Sherer v. Sarma, 2014 IL App (5th) 130207............................................................................................................................................... 66 Skokie Castings, Inc. v. Ill. Ins. Guar. Fund, 2013 IL 113873.................................................................................................................... 89 Smith v. Crane Co., No. 13 C 7411, 2014 WL 3509731 (N.D. Ill. July 14, 2014)..................................................................................... 68 St. Martin v. First Hospitality Grp., Inc., 2014 IL App (2d) 130505.......................................................................................................... 60 Stevenson v. FedEx Ground Package Sys., Inc., No. 13 C 138, 2014 WL 4783053 (N.D. Ill. Sept. 24, 2014)......................................... 88 Stone v. Mitek Indus., Inc., 2014 IL App (3d) 120122-U............................................................................................................................ 63 Sunny Hill of Will County v. Ill. Workers’ Comp. Comm’n, 2014 IL App (3d) 130028WC........................................................................ 81 Suter v. Ill. Workers’ Comp. Comm’n, 2013 IL App (4th) 130049WC....................................................................................................... 71 Thompson v. Cook Dupage Transp., 2013 IL App (1st) 123208WC-U...................................................................................................... 77 Tiburzi Chiropractic v. Kline, 2013 IL App (4th) 121113........................................................................................................................... 80 Tiner v. Ill. Workers’ Comp. Comm’n, 2014 IL App (4th) 130456WC-U................................................................................................... 72 Tolbert v. Ill. Workers’ Comp. Comm’n, 2014 IL App (4th) 130523WC.................................................................................................... 83 Venture-Newberg-Perini, Stone & Webster v. Ill. Workers’ Comp. Comm’n, 2013 IL 115728................................................................... 70 Vertin v. Mau, 2014 IL App (3d) 130246.................................................................................................................................................... 60 Vill. of Villa Park v. Ill. Workers’ Comp. Comm’n (Simons), 2013 IL App (2d) 130038WC...................................................................... 75 West Bend Mut. Ins. Co. v. Talton, 2013 IL App (2d) 120814.................................................................................................................... 78 Wiggins v. Bonsack, 2014 IL App (5th) 130123.......................................................................................................................................... 69 Young v. Ill. Workers’ Comp. Comm’n, 2014 IL App (4th) 130392WC...................................................................................................... 70
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Survey of Law
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