Apportionment of Fault Among Settling Defendants

By Michael W. Tootooian

The Illinois Supreme Court is currently considering the issue of whether a settling party should be included on the verdict form in calculating the remaining parties’ percentages of fault to determine several liability pursuant to §2-1117 of the Illinois Code of Civil Procedure. That issue is raised in the case of Anna Skaggs v Senior Services of Illinois, Inc., et al (Docket Number 100423). What follows is a summary of the IDC’s amicus brief, authored by David H. Levitt of Hinshaw & Culbertson. A copy of the IDC’s amicus brief is attached.

Before discussing this issue any further, the author states that it was the intent of the newsletter committee to have a similar article prepared by the plaintiffs’ bar. It was believed that ITLA had also filed an amicus brief in this matter. In fact, ITLA has not filed an amicus brief, which is why IDC’s position is being set forth without a counter viewpoint by ITLA. It is the position of the Tort Litigation Newsletter Committee to present balanced viewpoints and if ITLA wishes to submit an article on this issue, we will include it in our next newsletter.

It should also be noted that this appeal will not decide whether the recent amendment to §2-1117 to exclude the plaintiff’s employer from the fault calculation is valid or not. The present language of this statute reads as follows:

5/2-1117 Joint Liability

Except as provided in Section 2-1118, in actions on account of bodily injury or death or physical damage to property, based on negligence, or product liability based on strict tort liability, all defendants found liable are jointly and severally liable for plaintiff’s past and future medical and medically related expenses. Any defendant, whose fault, as determined by the trier of fact, is less than 25% of the total fault attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendant except the plaintiff’s employer, shall be severally liable for all other damages. Any defendant whose fault, as determined by the trier of fact, is 25% or greater of the total fault attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendants except the plaintiff’s employer, shall be jointly and severally liable for all other damages.

The IDC amicus brief starts out by noting that the constitutionality of §5/2-1117 was upheld by the Illinois Supreme Court in Unzicker v Kraft Food Ingredients Corp., 203 Ill. 2d 64, 783 N.E.2d 1024 (2002) (It was after that decision that the legislature amended §5/2-1117 to exclude employers from the fault allocation) Earlier, the Supreme Court held in Lannom v Kosco, 158 Ill. 2d 535, 634 N.E.2d 1097 (1994) that a settling defendant would not “abolish” the remaining defendant’s rights under § 2-1117.

The plaintiff’s position is that a settling party’s fault should not be considered in determining the percentage of total fault of the non-settling defendants. The IDC urges the court to declare that the language of and policy behind §2-1117 is to prevent plaintiffs from collecting against minimally responsible but deep-pocketed defendants by manipulating the system through settlements with shallow-pocketed defendants.

The key issue of dispute is whether a party must remain a defendant or third-party defendant at the time of trial in order for that party’s fault to be included in the percentage of fault calculation under § 2-1117. The IDC maintains that this is not necessary while the plaintiff argues that it is. The IDC argues that the statute does not contain any language that a defendant or third party defendant remain in the case at the time of trial for its fault to be considered in the calculation. The language supporting such an interpretation is : “Any defendant whose fault, as determined by the trier of fact, is less than 25% of the total fault attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendant who could have been sued by the plaintiff, shall be severally liable for all other damages.”

The plaintiff argues that if settled parties were to be included in the fault calculation, the statute would have expressly stated this. However, this analysis was rejected by the Supreme Court in Unzicker when it found erroneous the Fifth District’s position that employers were not to be included in the fault calculation because the statute did not expressly include employers. (As mentioned above, in response to Unzicker, the legislature has amended the statute, to expressly exclude employers from the fault calculation.) Without the inclusion of settling parties in the fault calculation, the purpose of the statue would be rendered meaningless. The statute was meant to avoid having minimally responsible but deep-pocketed defendants paying for shallow-pocketed but substantially responsible defendants.

The Court’s Prior Decisions Recognize that Settling Parties Are to Be Included in the Fault Allocation

Settling parties are included on verdict forms for other purposes. After the Supreme Court’s adoption of comparative negligence in Alvis v Ribar, 85 Ill.2d 1, 421 N.E.2d 886 (1981), the jury now needs to determine the liability of all tortfeasors to determine accurately the extent of the plaintiff’s responsibility for his or her own injuries. The same is true for contribution actions. The parties have a right to an allocation of fault for all tortfeasors, parties and nonparties alike, who are subject to liability in tort. Truszewski v Outboard Marine Motor Corp., 292 Ill. App. 3d 558, 685 N.E.2d (1^st Dist, 1997)Lombardo v Reliance Elevator Co., 315 Ill. App. 111, 733 N.E.2d 874 (1^st Dist. 2000).

Such an Allocation of Fault Will Not Result in a Double Set-Off

The IDC brief then rebuts several of the plaintiff’s arguments, one of which is that a defendant will receive a double set-off: one on the dollar amount paid by the settling party and then when the non-settling party’s percentage of fault would be assessed against the reduced amount. The IDC expressly rejects such a position, noting that no defendant has ever asserted such a position.

The IDC agrees that a defendant’s several liability share, subject to one caveat, is not entitled to a set-off by the amount paid by the settling party. A minimally responsible party will always have joint and several liability with respect to medical expenses. As to that portion of the non-settling defendant’s liability for medical expenses a dollar for dollar set-off should be allowed.

The rule of set-off in joint and several liability situations is designed to ensure that the plaintiff makes only one recovery. Where that policy is not impacted, there is no reason to provide a dollar for dollar set-off. Two hypotheticals are set forth as examples.

A $100,000 verdict with all the parties, including settling parties on the verdict form for fault allocation. There are no medical expenses. The plaintiff has settled with Defendant A for $50,000 who the jury found to be 80% at fault while Defendant B was found to be only 20% at fault. Plaintiff’s double-set off argument would mean Defendant B would be liable for only $10,000 ($100,000 – $50,000 x 20% = 10,000). However, the true calculation would not give Defendant B both a dollar for dollar set-off and a percentage allocation. The true calculation would give the plaintiff $70,000 and not $60,000 as the plaintiff argues. Defendant B is paying it precise liability share $20,000 (100,000 x 20%), making it unnecessary for Defendant B to get the dollar set-off of Defendant A’s settlement.

The other hypothetical contains the exception because it would allow the plaintiff to make more than a full recovery. Assume the plaintiff in the above hypothetical settled with Defendant A for $95,000. Having Defendant B pay its full 20%, without taking the set-off into account would result in the plaintiff receiving $115,000, $15,000 more than what the jury determined. In this situation Defendant B should be liable for only 5,000 – the difference between the amount previously received by the plaintiff and the amount of damages as determined by the jury.

Settlement Is Not the Paramount Public Policy

The plaintiff argues that settlement is the paramount public policy behind every tort principle. It is one but not the only public policy consideration. The enactment of §2-1117 makes it clear that the proper allocation of fault among the parties in also an important public policy in promoting settlement.

The Plaintiff’s Hypothetical Calculations are Flawed and Unrealistic

            The plaintiff’s hypotheticals all assume that the defendants would seek and be entitled to a double set-off. The IDC sets forth several hypotheticals to show the unfair-ness of the plaintiff’s position.

1. The plaintiff gets into a vehicle with a drunk driver who is stopped by the police who negligently allow him to proceed. The drunk driver and the passenger are involved in a one car accident. The drunk driver settles with the plaintiff for his $20,000 policy limit and is not put on the verdict form. The plaintiff is found to be 35% comparatively negligent but the target and deep pocket defendant is the Village which employs the police officer. Should the Village be liable for the entire judgment, after the comparative negligence reduction because the primarily at fault drunk driver had limited financial means?

2. A driver with his family comes upon an accident scene but fails to take appropriate action and as a result runs into the rear of other vehicles that had stopped at the scene. There are two lawsuits: the lawsuit by the driver’s family against him and the other vehicle operators, who file contribution claims against him and the driver’s own lawsuit against the other vehicle operators. He settles with his family members for his insurance policy limits and is not put on the verdict form. The jury finds him to be at least 51% at fault in his own lawsuit and as such he is entitled to no recovery. Should the remaining vehicle operators be liable for the entire judgment in favor of his family because they did not want to pursue their spouse/father and his limited financial means.

In fact the above are not hypotheticals. They are the taken from the cases of Ozik v Gramins 345 Ill. App. 3d 502, 799 N.E.2d 871 (1^st Dist. 2003) and Yoder v Ferguson, Consolidated Docket Nos. 1-04-3214 & 1-04-3230, currently pending before the Illinois Appellate Court. In both of these cases the trial court refused to include the shallow pocketed settling party on the verdict forms, despite the fact that the settling party was clearly substantially at fault. These real life cases, as opposed to the plaintiff’s hypotheticals, show that leaving out the settling party is diametrically opposed to the intent of §2-1117.

The IDC requests that the court affirm the opinion and judgment of the Fourth Appellate District and hold that settling parties are included for purposes of apportioning fault under §5/2-1117.