Waterhouse v. Robinson
2017 IL App (4th) 160433
Ill. App. Ct.2017Background
- In January 2014 Waterhouse was struck by a car driven by Robinson and suffered severe injuries; both parties were insured by State Farm.
- State Farm paid $27,463.04 under Waterhouse’s medical payments coverage and informed counsel it had subrogation rights; Robinson later tendered his $50,000 liability policy limit.
- Waterhouse sued Robinson; his attorney negotiated a $50,000 settlement with Robinson (State Farm waived subrogation as to that tort settlement).
- Waterhouse moved to adjudicate liens, seeking to reduce State Farm’s medical-payments lien by one-third under the common-fund doctrine and to force State Farm to share litigation costs; Blue Cross’s lien was settled separately.
- The trial court denied the motion as to State Farm; Waterhouse appealed, arguing the common-fund doctrine applied to State Farm’s lien arising from its medical-payments payments.
- The appellate court found the common-fund claim premature because any benefit to State Farm from the settlement (via offsets against a pending underinsured-motorist claim) was speculative, vacating the lien adjudication and affirming the remainder of the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant/State Farm's Argument | Held |
|---|---|---|---|
| Whether the common-fund doctrine applies to State Farm’s $27,463.04 medical-payments lien arising from the tort settlement | Waterhouse: attorney created a common fund by securing the $50,000 settlement; State Farm benefited (or will benefit) because the settlement reduces its liability and may be offset against Waterhouse’s underinsured-motorist claim, so its lien should be reduced and it should share costs | State Farm: it waived subrogation to the tort settlement and thus received no benefit; any recovery in underinsured-motorist proceedings would not be from a fund created by Waterhouse’s attorney, so the common-fund doctrine does not apply | The court held the question was not yet justiciable: any benefit to State Farm from the settlement is speculative pending resolution of the underinsured-motorist claim, so the trial court lacked subject-matter jurisdiction to adjudicate the lien now; vacated the lien adjudication but affirmed other rulings |
Key Cases Cited
- Wendling v. Southern Illinois Hosp. Servs., 242 Ill. 2d 261 (doctrine defined; common-fund is an exception to the American rule on attorney fees)
- Baez v. Rosenberg, 409 Ill. App. 3d 525 (common-fund permits reimbursement from fund created or increased by attorney)
- Linker v. Allstate Ins. Co., 342 Ill. App. 3d 764 (elements required to sustain common-fund claim)
- Bishop v. Burgard, 198 Ill. 2d 495 (articulates common-fund elements)
- Johnson v. State Farm Mut. Auto. Ins. Co., 323 Ill. App. 3d 376 (distinguishable; insurer’s policy offset negated creation of a fund benefiting insurer)
- Stevens v. Country Mut. Ins. Co., 387 Ill. App. 3d 796 (insurer benefited from tort settlement by offset against underinsured-motorist recovery; common-fund applied)
- Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325 (judgments entered without subject-matter jurisdiction are void)
- Schak v. Blom, 334 Ill. App. 3d 129 (courts must vacate void orders)