USF HOLLAND, INC., а Michigan Corporation, Plaintiff-Appellant, v. RADOGNO, CAMELI, and HOAG, P.C., an Illinois Corporation, and PERRY W. HOAG, Defendants-Appellees.
Docket No. 1-13-1727
Appellate Court of Illinois, First District, First Division
December 15, 2014
January 28, 2015
2014 IL App (1st) 131727
Hon. Thomas L. Hogan, Judge, presiding.
Decision Under Review: Appeal from the Circuit Court of Cook County, No. 08-L-6760. Judgment: Affirmed.
Donohue, Brown, Mathewson & Smyth, LLC, of Chicago (Norman J. Barry, Jr., and Karen Kies DeGrand, of counsel), for appellees.
Justices Connors and Harris concurred in the judgment and opinion.
OPINION
¶ 1 This appeal arises from the trial court’s order granting summary judgment in favor of defendants-appellees Radogno, Cameli, & Hoag, P.C. (Radogno), and Perry W. Hoag dismissing the legal malpractice claim asserted against them by their former client, plaintiff-appellee USF Holland, Inc. (USF).
BACKGROUND
¶ 3 The legal malpractice claim at issue in this appeal concerns the defense of a personal injury lawsuit against USF arising from a motor vehicle accident in Indiana. On June 19, 2002, a truck driven by Dale Gilchrist, a USF employee, attempted a left-hand turn on a highway in Michigan City, Indiana, and collided with an oncoming car driven by Anthony Hardin. Lisa Keppen, a passenger in Hardin’s car, was severely injured in the collision and was rendered a paraplegic.
¶ 4 Within weeks of the accident, USF retained the Radogno law firm, of which Hoag is a partner,1 to represent USF in the event a related lawsuit was filed. On December 4, 2003, Keppen filed a complaint in the circuit court of Cook County against USF (which, although a Michigan corporation, allegedly conducted business in Illinois sufficient to subject it to the jurisdiction of Illinois courts). The complaint also named as defendants USF’s parent corрoration, USFreightways Corporation, and Gilchrist; Radogno represented these defendants as well as USF. Among other allegations, Keppen’s lawsuit alleged that Gilchrist had negligently operated the truck and that USF had violated Illinois statutes governing the maintenance and operation of commercial motor vehicles involved in interstate commerce.
¶ 5 Correspondence dated January 14, 2004 from Radogno to USF, entitled “Status Report,” discussed Radogno’s strategy for the Keppen action. That correspondence indicated Radogno’s view that “Indiana state court would be the preferred location to litigate this matter.” The report explained that “[t]he jury verdict potential for a catastrophic injury is lower in northern Indiana than in Cook County, Illinois.” In addition, Radogno’s report noted that “Indiana allows apportionment of fault to a ‘non-party’ (in this case driver Anthony Hardin),” but that “Illinois would require us to file a contribution action against Hardin” as a third-party defendant. However, Radogno noted that the circuit court “probably does not have jurisdiction over Hardin,” who was not an Illinois resident. Radogno also advised that, although Illinois courts could exercise jurisdiction over USF because it was “doing business” within the state, it believed USF “ha[d] a viable motion to dismiss and transfer to Indiana based on the doctrine of
¶ 6 Radogno did not file an answer or plead any affirmative defenses to Keppen’s complaint, but responded on February 17, 2004 by filing a motion to dismiss under the doctrine of forum non conveniens. On the samе date, Radogno filed a motion to dismiss Gilchrist, an Indiana resident, due to lack of personal jurisdiction. The parties conducted limited discovery related to the forum non conveniens motion and fully briefed the motions to dismiss. There is no explanation in the record, but the motions were not decided until June 29, 2005, approximately 16 months after they were filed. On that date, the circuit court granted the motion to dismiss Gilchrist from the case but denied USF’s motion to dismiss under the doctrine of forum non conveniens.
¶ 7 Pursuant to Supreme Court Rule 306(a)(2), this court granted USF’s request for leave to file an interlocutory appeal of the order denying the forum non conveniens motion to dismiss.
¶ 8 Following the unsuccessful appeal of the denial of its forum non conveniens motion, USF elected to change its defense counsel. In early 2006, Radogno withdrew as USF’s counsel and USF’s successor counsel, the law firm Patton & Ryan, LLC, took over the legal defense of USF and USFreightways in the Keppen lawsuit. Notably, no answer or affirmative defenses had been filed on behalf of USF prior to the change in its counsel from Radogno to Patton & Ryan.
¶ 9 On June 20, 2006, through its successor counsel, Patton & Ryan, USF and USFreightways Corp. filed an answer which included a single affirmative defense to the Keppen lawsuit. The affirmative defense claimed that “the sole proximate cause of the occurrence which is the subject of [Keppen’s complaint] was the negligence of nonparty, Anthony Hardin.” Specifically, the affirmative defense alleged Keppen’s injuries were the result of Hardin’s negligence in: “(a) [f]ailing to keep his vehicle under proper control; (b) failing to yield the right of way ***; (c) failing to take those steps necessary to avoid the collision; (d) driving his vehicle at an excessive rate of speed; and (e) failing to maintain a proper and sufficient lookout.” Notably, the affirmative defense did not cite any particular statutory basis or otherwise indicate that it relied upon either Illinois or Indiana state law.
¶ 10 In response, on July 11, 2006, Keppen filed a motion to strike the affirmative defense claiming that the defense was barred under either Illinois or Indiana law. Keppen’s motion to strike argued that “Illinois law does not provide for a ‘non-party’ defense” and asserted that the Illinois statutory deadline for USF to assert a contribution claim against Hardin had expired in December 2005, two years after the filing of Keppen’s complaint. See
¶ 11 The record on appeal does not indicate that Keppen’s motion to strike the affirmative defense was opposed by USF’s successor counsel, and there is no record of any oral argument on that motion. On September 12, 2006, the trial court granted Keppen’s motion to strike USF’s affirmative defense. The corresponding written order did not indicate the basis on which the court struck the affirmative defense or whether it relied on Illinois or Indiana law in doing so. The record on appeal does not indicate that USF’s successor counsel moved to reconsider that order, sought interlocutory appeal on the issue, or otherwise sought clarification from the trial court as to its grounds for striking the defense.
¶ 12 Following the order striking the affirmative defense, USF and Keppen eventually settled Keppen’s claims against all defendants for the sum of $5.65 million in September 2007. A portion of the settlement proceeds, $3.65 million, was funded by USF’s insurer. The remaining $2 million was funded through a payment by YRC Worldwide, Inc. (YRCW), a corporation of which USF is a subsidiary.
¶ 13 On June 20, 2008, USF filed a complaint against the Radogno law firm and Hoag individually, asserting one count of legal malpractice and one count of breach of contract. USF alleged that “as a direct and proximate result of [Radogno’s] negligence *** USF was left without its primary defense to the Keppen Suit and, therefore, faced significant exposure that it would not have otherwise faced had Defendants not violated their standard of care. As a consequence, USF was forced to settle the Keppen Suit for the sum of $5,650,000.” USF claimed that Hoag had recommended a forum non conveniens motion to dismiss the suit and transfer the case to Indiana state court because “the verdict potential of the Keppen Suit was higher in Illinois” and because “an Indiana jury could find USF ‘not guilty’ because under Indiana law the jury could allocate 100% of the fault to a non-party such as Hardin in accordance with the Indiana Comparative Fault Act.”
¶ 14 USF further alleged that “although the premise for moving to transfer the Keppen Suit to Indiana was so that the Indiana non-party defense and Hardin’s fault could be asserted,” Radogno “failed to timely file a ‘non-party defеnse’ as an affirmative defense.”3 Specifically, USF claimed Radogno had allowed the deadline to lapse, arguing that under the language of
¶ 15 USF claimed that “[a]bsent the ability to present evidence of Hardin’s fault” through the Indiana nonparty defense, “USF’s primary defense *** was lost, which significantly increased the exposure at trial and any settlement value of the case.” USF alleged that Radogno had breached its duty of care by, among other things, “needlessly pursu[ing] a forum non conveniens motion while allowing the time limits for raising the non-party fault or contribution
¶ 16 Radogno filed a motion to dismiss USF’s malpractice suit on September 19, 2008. That motion argued that USF’s claim that Radogno had been negligent in failing to assert the non-party defense under Indiana law had been “waived by virtue of USF’s failure to create a record in the Keppen case from which this Court or any court could analyze and rule on the propriety and judicial basis of the trial court’s decisions in the Keppen case.” Radogno specifically argued there was an insufficient record to assess the alleged failure to assert the Indiana nonparty defense, as USF’s successor counsel had “failed to file a written opposition to the Keppen motion to strike the non-party defense,” “failed to create a record or transcript of the hearing on the Keppen motion to strike,” failed to seek review or reconsideration of the order granting the motion to strike, and failed to obtain clarification from the Keppen court as to whether it had applied Illinois or Indiana law.
¶ 17 Apart from its waiver argument, Radogno’s motion to dismiss additionally argued that the Indiana nonparty defense could have been asserted even after Radogno ceased to represent USF. Radogno argued that the governing Indiana statute “grants discretion to the trial court to alter the time period for filing a non-party defense,” and thus the defense was “arguably viable.” Radogno’s motion further emphasized that Keppen, as Hardin’s passenger at the time of the accident, was “aware of a possible cause of action against Hardin” and thus “she cоuld not have been surprised or prejudiced” when successor counsel filed USF’s affirmative defense naming Hardin.
¶ 18 Radogno also argued that “given the statutory provision that the Indiana non-party defense be filed with the ‘defendant’s first answer,’ and the trial court’s prolonged consideration of the USF motion to dismiss for forum non conveniens, the Keppen court had both discretion and good reason to ‘alter’ the time for filing the non-party defense” under the Indiana statute.
¶ 19 USF’s opposition to the motion to dismiss argued that it did not need to create a record in the underlying litigation in order to preserve its legal malpractice case, and further argued that USF’s conduct in the underlying action did not amount to a waiver of the claim that Radogno failed to preserve the Indiana nonparty defense. USF also argued that the language in
¶ 20 The trial court heard oral argument on Radogno’s motion to dismiss on January 12, 2009. In denying Radogno’s motion, the court found that “[a] plain reading of [section 34-51-2-16 of the Indiana Code] shows that an alteration of the time limitation for filing a nonparty defense can only be given to allow the defendant a reasonable opportunity to discover the existence of a nonparty defense and allow the plaintiff a reasonable time to add that nonparty as a joint defendant.” The court found that USF “was served within 150 days before the expiration of the statute of limitations, but defendant did not plead any nonparty defense prior to 45 days” before the end of the limitation period. The court concluded that “[Radogno] ha[s] not shown that after they were discharged by USF *** both of the grounds for altering the limitation period for [the] nonparty defense existed, making it a viable defense that USF’s suсcessor counsel would have been responsible for pursuing.”
¶ 21 The trial court also acknowledged that it did not decide, and had not been asked to decide, whether the Keppen court had relied on Illinois or Indiana law when it struck the affirmative defense naming nonparty Hardin. The court indicated this would be a question for a jury in assessing the underlying “case within a case.” The trial court further noted that Radogno had cited no case supporting its argument that USF “was responsible for making a record for this Court to review as if this were an appeal of the underlying case.” The motion to dismiss was denied in an order dated January 12, 2009.
¶ 22 Radogno filed its answer and two affirmative defenses to the malpractice complaint on February 23, 2009. Radogno pleaded an affirmative defense of waiver on the grounds that USF, through its successor counsel, had failed to oppose Keppen’s motion to strike USF’s affirmative defense and failed to seek reconsideration or clarification as to whether the Keppen court was applying Indiana or Illinois law. Radogno argued that USF, “[b]y virtue of its failure to create a record in the Keppen court establishing the state law followed by the Keppen court in striking the Indiana non-party defense,” had “waived any right in the current litigation to seek a conflict of law determination for this court which, without benefit of a record[,] *** cannot speculate as to the reasons for the Keppen court’s decision.” Radogno’s second affirmative defense, entitled “comparative fault,” similarly alleged that USF was “negligent in its defense of the Keppen litigation” by failing to promptly file an Indiana nonparty defense, failing to oppose Keppen’s motion to strike, and failing to seek clarification or reconsideration of the Keppen court’s ruling.
¶ 23 Following denial of Radogno’s motion to dismiss, the parties engaged in extensive discovery, including depositions of fact and expert witnesses. USF filed a motion for partial summary judgment on June 24, 2011 with respect to the breach element of its malpractice claim. USF argued there was no genuine issue of material fact that Radogno and Hoag “breached their duty of care by failing to preserve or protect [USF’s] best defense to the
¶ 24 Radogno’s cross-motion separately argued that, even if Indiana law had governed the Keppen action, the Indiana nonparty defense remained viable at thе time Radogno was replaced as USF’s counsel. Relying on the language of
¶ 25 Apart from the cross-motions on the issue of whether a breach had occurred, on September 9, 2011, Radogno filed a separate motion seeking summary judgment on the basis that USF could not establish the element of damages to support a malpractice claim. Radogno contеnded that summary judgment in its favor was warranted since entities other than USF had funded the $5.65 million settlement of the Keppen suit, such that USF had not suffered actual damages. Specifically, Radogno argued that discovery had revealed that USF had been acquired in 2005 by YRCW, which had since funded the defense of the Keppen lawsuit and paid $2 million of the Keppen settlement. Radogno further contended that the remaining $3.65 million of settlement funds had been paid by an insurer, National Union/AIG. Citing the decision in Sterling Radio Stations, Inc. v. Weinstine, 328 Ill. App. 3d 58 (2002), for the proposition that the collateral source rule does not apply in a legal malpractice action and damages paid on behalf of a plaintiff by independent sources are not recoverable, Radogno claimed USF could not establish that it had suffered any damages from the Keppen settlement.
¶ 26 On February 22, 2012, the trial court, a different judge than the one who ruled on Radogno’s motion to dismiss on January 12, 2009, issued a memorandum opinion and order addressing: (1) USF’s motion for summary judgment on the element of breach of the standard
¶ 27 First, the court addressed the parties’ cross-motions for summary judgment with respect to the element of breach and concluded that neither party was entitled to summary judgment on that issue. With respect to USF’s argument that Radogno had failed to preserve the nonparty defense, the court examined
¶ 28 However, the court noted that “[USF’s] own expert *** testified that Illinois procedural law does not require the filing of an answer and affirmative defense while a motion to dismiss is pending.” Further, the court noted Hoag’s deposition testimony that, had Radogno been retained as USF’s counsel, he had intended to assert the Indiana nonparty affirmative defense with USF’s initial answer following the resolution of the forum non conveniens motion. The court noted Hoag’s belief “that the non-party defense statute of limitations under the Indiana statute is not a ‘hard and fast’ deadline” and cited the testimony of Radogno’s legal expert that the firm had exercised reasonable professional judgment because “the filing of the nonparty defense while the forum non conveniens motion remained undecided could well have negatively influenced the circuit court in its ruling on the motion to dismiss.”
¶ 29 Given the language of
¶ 30 Although the February 22, 2012 order stated that Radogno was “still representing [USF] at th[e] time the statute of limitations passed for asserting the non-party fault defense under the Indiana statute,” the trial court nonetheless concluded that “a question of fact exists as to whether [Radogno] breached the standard of care in not filing a nonparty defense pursuant to Indiana law.” Thus, the court declined to grant summary judgment to either USF or Radogno on this element of USF’s malpractice claim.6
¶ 31 After denying summary judgment to either party on the issue of breach, the court turned to Radogno’s motion for summary judgment on the issue of damages. The court recognized that
¶ 32 In ruling on the summary judgment motion regarding damages, the trial court distinguished between the portion of the Keppen settlement allegedly paid by USF’s parent corporation, YRCW, and that paid by its insurer. With respect to the $3.65 million paid by the insurer, the court held that Sterling Radio controlled, such that the collateral source rule did not apply. Thus, the court granted Radogno’s motion with respect to this portion of the settlement, concluding USF “cannot recover the $3.65 million that was paid by the insurance company.”
¶ 33 However, the trial court declined to grant summary judgment with respect to the remaining $2 million of the settlement funds. Although Radogno argued this amount was paid by USF’s parent corporation, YRCW, which should be regarded as “another collateral source,” the court found the record presented a genuine issue of material fact on that issue. The court reasoned: “It is possible *** that [USF] paid for that portion of the settlement directly,” as “[t]he record does not clearly and affirmatively establish that another party, YRCW, paid for that settlement.” The court noted that since “[USF] is a subsidiary of YRCW, it does not have its own bank account” and it was thus “impossible for [USF] to directly write the settlement check or wire transfer funds.” Nonetheless, the court cited deposition testimony by a senior accountant at YRCW indicating that, although the $2 million “was technically paid for by YRCW out of [its] global account, this loss was realized only by [USF] and no other entity.” (Emphasis in original.) The court also cited the accountant’s testimony that although YRCW technically held the cash, “at the end of day, [USF] gave $2 million dollars to YRCW to cover the Keppen settlement.” The court concluded that “due to the complex corporate structure” of USF, “a question of material fact exists as to whether [USF] paid for that portion of the settlement or if it was actually paid by a third party.” Thus, the court denied Radogno’s motion for summary judgment with respect to this $2 million portion of the Keppen settlement.
¶ 34 On March 22, 2012, Radogno moved for clarification of the court’s February 22, 2012 order on the parties’ summary judgment motions. Radogno asserted that language in the prior order could be “misconstrued as a ruling regarding the expiration of the time for filing an Indiana nonparty defense,” although the court had recognized that it was not clear whether the 150/45-day deadline was a “hard and fast” rule. Radogno contended that the order’s statements that the time for asserting the defense had expired while Radogno represented USF conflicted with the court’s recognition elsewhere that Radogno had “presented a reasonable interpretation of [section 34-51-2-16] and raised a question of fact that the nonparty defense remained viable after [USF] retained successor counsel.” Radogno thus asked the court to modify the February 22, 2012 order by striking any statements that the
¶ 36 The modified order found that “a reasonable inference may be drawn that [Radogno and Hoag] were negligent for not filing a nonparty defense within 45 days of the expiration of the statute of limitations,” but “[o]n the other hand, a reasonable inference can equally be drawn that [Radogno and Hoag] exercised reasonable care in bringing a forum non conveniens motion prior to raising an Indiana nonparty defense.” The order thus concluded that “because more than one reasonable inference can be drawn regarding whether or not [Radogno and Hoag] breached the standard of care, a question of material fact exists which precludes granting either” USF’s or Radogno’s motion for summary judgment on this issue.
¶ 37 Following the court’s ruling on the summary judgment motions, the parties prepared for trial and filed several motions in limine. Among these, USF filed a “Motion in Limine No. 1” seeking a ruling that Indiana substantive law governed the underlying Keppen lawsuit, premised largely on the basis that the collision occurred in Indiana and involved Indiana residents. In addition, USF filed a “Motion in Limine No. 2” that requested three rulings related to the interpretation of
¶ 38 On April 26, 2013, the court, yet a different judge from the one who had ruled on the February 2012 motions for summary judgment, heard oral argument on USF’s motion in limine No. 1, regarding whether Indiana or Illinois substantive law governed the underlying Keppen lawsuit. After hearing USF’s arguments in favor of application of Indiana law and Radogno’s arguments that Illinois law governed, the court reserved decision.
¶ 39 Oral argument on the motions in limine continued on April 29, 2013. At the outset of proceedings on that date, the court remarked that this was a “unique case *** because the Court is asked to sit as a trial court not as an appellate court and is asked to sit and make rulings on things that were never asked for in the underlying claim.” The court noted that “the defendant in the underlying case *** had opportunities to do some things that the defendant didn’t do, and now ask[s] the сourt to *** make a ruling that the defendant never asked for.” Nevertheless, with respect to USF’s motion in limine No. 1, the court concluded that “Indiana law applied to the underlying action” and thus granted USF’s motion on that issue.
¶ 41 In response, USF argued that Owens Corning was a unique factual situation and emphasized the provision of
¶ 42 At the conclusion of oral argument, the court determined that
¶ 43 Asked for clarification by USF, the trial court reiterated: “I would have allowed [the nonparty defense] up until the time that—I’d say September of 2006, the date on which the [Keppen] court *** was asked to rule on the defendant’s motion for affirmative defense.” The court added that, had it presided over the Keppen action, “I may have stricken the actual affirmative defense and asked for another attempt at utilizing the statutory scheme in Indiana, but I think that it would have been appropriate to exercise discretion under those circumstances.”
¶ 44 Radogno’s counsel asked the court to confirm that: “Plaintiff’s Motion in Limine Number 2 is denied, which leaves us with your ruling that Indiana law would have governed the Keppen case, that the statute of limitations contained within the Indiana nonparty defense stаtute was not as a matter of law blown because *** had there been a request for the Court to allow the filing of the nonparty defense, you would have allowed that.” The court answered verbally in the affirmative.
¶ 45 The court proceeded to conclude that its denial of USF’s motion in limine No. 2 “ma[d]e it impossible for [USF] to prove proximate cause under these circumstances.” Radogno proceeded to move for summary judgment “because there no longer is a genuine issue of fact
¶ 46 The court issued a written order on May 1, 2013 that granted plaintiff’s motion in limine No. 1 but denied motion in limine No. 2. On the same date, the court issued a separate written order stating that, in light of its denial of motion in limine No. 2, “[USF’s] motion for summary judgment is hereby [g]ranted for the reasons set forth by this Court on the record. Judgment be and hereby is entered on all counts in [USF’s] complaint at law.”
¶ 47 USF filed a notice of appeal on May 28, 2013 and an amended notice of appeal on May 29, 2013.7 In the amended notice, USF appealed from the final judgment granting summary judgment in favor of Radogno, as well as the accompanying order denying USF’s motion in limine No. 2. The notice further specified that USF appealed from the portions of the trial court’s February 22, 2012 order and modified order of June 28, 2012 that denied USF’s motion for partial summary judgment on the element of breach and partially granted Radogno’s motion for summary judgment on the issue of damages.
ANALYSIS
¶ 49 USF’s argument on appeal raises three issues, two of which concern interpretation of
¶ 50 Each of the contentions in this appeal involves review of decisions upon motions for summary judgment. “The standard of review for the entry of summary judgment is de novo.” General Casualty Insurance Co. v. Lacey, 199 Ill. 2d 281, 284 (2002). “Summary judgment is proper where, when viewed in the light most favorable to the nonmoving party, the pleadings, depositions, admissions, and affidavits on file reveal that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Id.;
¶ 52 We further note that review of the summary judgment rulings with respect to the elements of proximate causation and breach in USF’s malpractice claim require us to review the trial court’s interpretation of
¶ 53 USF first contends that the trial court erred in granting summary judgment on the basis that USF could not establish proximate causation to support its malpractice claim. The elements of a legal malpractice claim are well established. “To prevail on a legal malpractice claim, the plaintiff client must plead and prove that the defendant attorneys owed the client a duty of due care arising from the attorney-client relationship, that the defendants breached that duty, and that as a proximate result, the client suffered injury.” Northern Illinois Emergency Physicians, 216 Ill. 2d at 306. “The fact that the attorney may have breached his duty of care is not, in itself, sufficient to sustain the client’s cause of action. Even if negligence on the part of the attorney is established, no action will lie against the attorney unless that negligence proximately caused damage to the client.” Id. at 306-07.
¶ 54 Here, the alleged breach was Radogno’s failure to timely plead or preserve the Indiana nonparty defense on behalf of USF in the underlying Keppen action. In deciding USF’s motion in limine No. 2, the trial court determined that, contrary to USF’s contention that
¶ 55 Moreover, we note that the answer to the same question of statutory interpretation will also be dispositive with respect to USF’s second contention on appeal, concerning the trial court’s earlier denial of USF’s motion for partial summary judgment regarding the breach element of its malpractice claim. As stated by USF in its summary judgment motion, the alleged breach was that Radogno “missed the deadline under Indiana law” to timely assert a nonparty defense while it represented USF, thus losing USF’s chance to raise its best defense in the Keppen lawsuit. Thus, if it is determined that the nonparty defense actually remained viable after Radogno’s representation of USF in the underlying action, then Radogno did not squander USF’s chance to raise the defense and did not commit the alleged breach supporting the malpractice claim.
¶ 56 Before turning to the relevant statutory language, we address Radogno’s contention that USF’s conduct in the underlying Keppen lawsuit after discharging Radogno and hiring new counsel forfeited USF’s right to argue in this malpractice action that the Indiana nonparty defense had been lost due to Radogno’s negligence. Radogno relies largely on the fact that USF’s successor counsel did not specifically plead the Indiana statutory nonparty defense, but rather generally alleged an affirmative defense that nonparty Hardin was the sole proximate cause of Keppen’s injuries. Further, Radogno emphasizes that USF did not file any opposition to Keppen’s motion tо strike that affirmative defense. Moreover, after that motion was granted, USF did not seek reconsideration or clarification as to whether the trial court had relied on Illinois or Indiana law in striking the defense.
¶ 57 We recognize that USF’s successor counsel could have argued, but did not specifically argue, for application of the Indiana statutory nonparty defense and did not obtain an explicit order from the trial court that Indiana law governed the Keppen action. However, Radogno cites no authority suggesting that a malpractice plaintiff’s conduct of the underlying lawsuit, particularly its conduct after it had discharged defendant counsel, could waive the plaintiff’s right to allege malpractice in a subsequent lawsuit. Moreover, as noted by USF, waiver is the “intentional relinquishment of a known right.” Pielet v. Hiffman, 407 Ill. App. 3d 788, 798 (2011). The record does not suggest that USF’s conduct in the Keppen case after it retained successor counsel amounted to an “intentional relinquishment” of the right to assert the nonparty defense under Indiana law. Thus, we do not find sufficient basis in legal authority or on the facts of this case to conclude that USF’s conduct in defending the Keppen action after it had discharged Radogno waived its right to assert the alleged malpractice in this case.
¶ 58 We now turn to the question of whether the nonparty defense was viable during Radogno’s representation under the relevant Indiana statutory provisions. We note at the outset that we must interpret statutes under their plain language. Our supreme court has explained:
“The fundamental objective of statutory construction is to ascertain and give effect to the intent of the legislature. [Citation.] Thе most reliable indicator of legislative intent is the statutory language, given its plain and ordinary meaning. [Citation.] When the statutory language is clear and unambiguous, it must be applied as written without resort to extrinsic aids of statutory interpretation. [Citation.] We will not depart from the plain statutory language by reading into it exceptions, limitations, or conditions that conflict with the expressed intent of the legislature.” Gaffney v. Board of Trustees of the Orland Fire Protection District, 2012 IL 110012, ¶ 56.
¶ 60 With these principles in mind, we turn to the Indiana statutory provisions at issue in this case. The Indiana Code provides: “In an action based on fault, a defendant may assert as a defense that the damages of the claimant were caused in full or in part by a nonparty.”
¶ 61 The time at which a defendant may assert such a nonparty defense is governed by
“A nonparty defense that is known by the defendant when the defendant files the defendant’s first answer shall be pleaded as а part of the first answer. A defendant who gains actual knowledge of a nonparty defense after the filing of an answer may plead the defense with reasonable promptness. However, if the defendant was served with a complaint and summons more than one hundred fifty (150) days before the expiration of the limitation of action applicable to the claimant’s claim against the nonparty, the defendant shall plead any nonparty defense not later than forty-five (45) days before the expiration of that limitation of action.”
Ind. Code Ann. § 34-51-2-16 (West 2004).
Following this 150/45-day rule,
¶ 62 In this case, it is not disputed that, during Radogno’s representation of USF in the Keppen action, which ended in early 2006, no answer or affirmative defense was filed on behalf of USF. The parties also do not dispute that, as the collision causing Keppen’s injury occurred on June 19, 2002, she was subject to a 2-year statute of limitations period for asserting her personal injury claims that expired on June 19, 2004. It is also not disputed that Keppen served her complaint in the underlying action in December 2003, more than 150 days prior to the expiration of the applicable 2-year statute of limitations period.
¶ 63 Thus, USF’s position is that the time limit to assert a nonparty defense in the Keppen action was governed by the 150/45-day rule, under which the deadline for asserting a nonparty defense would occur in early May 2004, that is, 45 days prior to the June 19, 2004 expiration of Keppen’s 2-year limitations period. USF acknowledges that the last sentence of
¶ 64 In contrast to USF’s position that
¶ 65 The chief authority relied upon by Radogno is the Indiana Supreme Court’s decision in Owens Corning Fiberglass Corp. v. Cobb, 754 N.E.2d 905 (Ind. 2001). That case involved personal injury claims by a pipe fitter who had been exposed to asbestos over several decades before developing lung cancer. The plaintiff’s complaint had named 33 manufacturers or distributors of asbestos, including Owens Corning. Id. at 907. In its August 1996 answer, Owens Corning reserved its right, in the event plaintiff reached settlements with any codefendants, to “ ‘specifically delineate those defendants as settling non-party defendants, to request that the court add those defendants to any verdict form submitted to the jury, and to claim credit for any amounts received by the plaintiff from those defendants.’ ” Id.
¶ 66 Over one year later, in October 1997, Owens Corning “filed a motion for leave to amend its answer by adding as identified non-parties the names of the defendants with whom [plaintiff] had settled” (id. at 908) as well as “other entities that it contended had caused or contributed to [plaintiff’s] injuries and had not been joined as defendants” (id. at 912). The trial court permitted Owens Corning to amend its answer to add a nonparty defense for only one of the named entities but otherwise denied the motion to amend. Id. After a jury trial resulted in a verdict for the plaintiff, Owens Corning appealed the ruling on its nonparty defense motion. Id.
¶ 67 The Indiana Supreme Court analyzed whether the trial court committed reversible error when it prevented Owens Corning from asserting nonparty defenses, including with respect to settling defendants. The court noted: “To ensure fairness to the plaintiff, the burden of pleading and proving the specific name of the nonparty is on the defendant” and thus “a defendant who intends to use a nonparty defense must specifically name the nonparty.” Id. at 913. Citing the predecessor to
¶ 68 The Indiana Supreme Court noted that under the statute, “[t]he deadline for naming a nonparty defendant depends upon when the defendant receives notice of the availability of a
¶ 69 The court’s subsequent analysis was based on differentiating between whether the asserted nonparties had been initially named defendants or not. With respect to those entities which were made known to Owens Corning through plaintiff’s disclosure, but which had not been named as defеndants, the Indiana Supreme Court held “these parties should have been added with ‘reasonable promptness’ ” after their disclosure by plaintiff, and thus the trial court was justified in disallowing Owens Corning’s addition of such nonparty defenses. Id.
¶ 70 However, the Indiana Supreme Court held that the outcome should differ with respect to “nonparties [who] had been named as defendants at the outset of the litigation and subsequently settled with [plaintiff] or were otherwise dismissed from the action.” Id. Since these entities had initially been named as defendants, “they could not be added as nonparties” prior to their settlement or dismissal; moreover, as named defendants, they were already “known to the plaintiff.” Id.
¶ 71 The Owens Corning decision then quoted the language of
¶ 72 The court reasoned that “[t]o hold otherwise would be tantamount either to requiring Owens Corning to do something impossible—assert a nonparty affirmative defense with respect to a named defendant—or to preclude Owens Corning from asserting a nonparty affirmative defense at all with respect to a former named defendant.” Id. The court found “no support in the statute or its underlying purposes for either of these alternatives,” but held: “it is clear to us that the notice provisions with respect to nonparty affirmative defenses are designed, first and foremost, to advise plaintiffs of potential named defendants from which they may be able to obtain recovery and, secondarily, to put plaintiffs on notice generally of the contours of the defendant’s case at trial.” Id. The Owens Corning court reasoned that “[n]o violence is done to either of those objectives by permitting a defendant to assert a nonparty affirmative defense reasonably promptly after receiving notice that a named party defendant has been dismissed from the lawsuit.” Id. Under this logic, the Indiana Supreme Court held that, with respect to at least one former codefendant, Owens Corning had asserted a nonparty defense “within a reasonable time of receiving notice” of the nonparty’s settlement. Id. Thus, denying Owens Corning’s amendment to assert a nonparty affirmative defense with respect to that former defendant constituted reversible error. Id.
¶ 74 Nevertheless, Radogno contends that Owens Corning supports a finding that USF could have asserted a nonparty defense in the Keppen action because it lacked “actual knowledge” of the defense absent any specific ruling by the Keppen trial court that Indiana law would govern. Just as Owens Corning was found to lack “actual knowledge” of a nonparty defense against a codefendant until it became aware that the codefendant had settled (Owens Corning, 754 N.E.2d at 915), Radogno argues that “unless and until [USF], through successor counsel, sought a choice of law ruling, and the court elected to apply Indiana law, [USF] would not have had ‘actual knowledge of a nonparty defense.’ ” Radogno thus contends that, because the Keppen court never explicitly held that Indiana law governed (and in fact was never asked to rule on the question by Radogno or USF’s successor counsel), USF never obtained “actual knowledge” of the defense and thus it cannot be said that the nonparty defense was ever rendered nonviable.
¶ 75 Although not explicitly argued by the parties, we find that another application of
¶ 76 Under this application, the language of the statute beyond the initial sentence—including the 150/45-day rule relied upon by USF, and the discretionary provisions relied upon by Radogno—would be implicated only if the defendant had in fact already filed an answer, but did not plead a nonparty defense in that first answer. Under that reading of the statute, the initial question in determining whether the nonparty defense had been timely asserted would be whether the defendant had already pleaded his first answer. If no answer had yet been filed, then the defense would necessarily remain viable, as the defendant had not yet had a chance to comply with the statute’s initial mandate that a known nonparty defense “shall be pleaded as a part of the first answer.” (Emphasis added.)
¶ 78 An interpretation focusing on the filing of the nonparty defense in the initial answer also appears to be consistent with the Indiana Rules of Trial Procedure, which require affirmative defenses to be asserted in responsive pleadings. See Paint Shuttle, Inc. v. Continental Casualty Co., 733 N.E.2d 513, 525 (Ind. Ct. App. 2000) (“Indiana Trial Rule 8(C) provides that if a responsive pleading is necessary, the party filing the pleading must include with that responsive pleading any affirmative defense it seeks to assert.”);
¶ 79 Although USF has identified a number of decisions—in the context of motions to amend—where Indiana courts have declined to permit assertion of a nonparty defense past the claimant’s limitations period, it has made no credible argument regarding why those cases are controlling in the procedural posture of the Keppen action, where no answer was filed until after Radogno was discharged and replaced by successor counsel. As the cases cited by USF concern situations where a defendant had already filed an answer, the initial sentence of
¶ 80 For example, USF cites Templin v. Fobes, 617 N.E.2d 541 (Ind. 1993), to support its argument that
¶ 81 At trial, the jury returned a verdict in plaintiffs’ favor but allocated the vast majority of fault to nonparty Rockwood. Id. at 543. However, the Indiana Court of Appeals held that the trial court should not have permitted the defendant to name Rockwood as a nonparty while denying plaintiffs’ motion to add Rockwood as a defendant; this had allowed the defendant at trial “to shift the blame to Rockwood, an empty chair the [plaintiffs] were not permitted to fill.” (Internal quotation marks omitted.) Id. The Supreme Court of Indiana agreed, finding that
¶ 82 USF cites Templin for the proposition that the 150/45-day rule is “a strict deadline when suit is filed more than 150 days before the limitation period ends.” However, the situation in Templin is distinguishable from the facts in this case for at least two reasons. First, the defendant in Templin had already asserted a generic nonparty defense before seeking leave to amend its pleading to name Rockwood as a nonparty, whereas Radogno had not filed an initial answer or affirmative defenses on behalf of USF. Second, the Templin trial court had permitted the defendant to assert a nonparty defense with respect to Rockwood, who thus became an “empty chair” at trial, while denying plaintiffs’ motion to amend their complaint to sue Rockwood directly. In contrast, there is no indication from the record in this case that Keppen ever sought to name Hardin as a party in the underlying personal injury action against USF.
¶ 83 USF also relies on language from an Indiana Court of Appeals decision that “when service occurs more than 150 days before the expiration of the statute of limitations, the rule governing the amendment to assert a nonparty defense strikes a balance between providing a reasonable opportunity to the defendant to discover and assert a nonparty defense and providing a reasоnable opportunity to the claimant to join the alleged nonparty before expiration of the statute of limitations.” Kelly v. Bennett, 792 N.E.2d 584, 586 (Ind. Ct. App. 2003). However, Kelly concerned the denial of defendant’s leave to amend his answer to add the nonparty defense; that is not the situation in the underlying case here. Indeed, the above-quoted language explicitly refers to the 150/45-day rule as “governing the amendment to assert a nonparty defense.” (Emphasis added). Id. Moreover, the defendant in Kelly had not been served with the underlying complaint more than 150 days before the running of the statute of limitations for the underlying claim, and thus the 150/45-day rule did not apply. Id. at 587. Rather, the Kelly court found that the proper inquiry under
¶ 84 The other decisions cited by USF for its contention that the nonparty defense may never be permitted past the expiration of plaintiff’s limitations period also involved rulings on defendants’ motions to amend. USF cites McClain v. Chem-Lube Corp., 759 N.E.2d 1096 (Ind. Ct. App. 2001), in which the Indiana Court of Appeals stated that
¶ 85 In sum, the case law cited by USF supports the proposition that, in the context of a motion to amend an answer to assert a nonparty defense under
¶ 86 It does not appear that Indiana courts have addressed the specific procedural scenario presented in this case—that is, whether a defendant would be permitted to assert a nonparty defense in its first answer (rather than an amendment), even after the expiration of the plaintiff’s statute of limitations period. Given the language of
¶ 87 On the one hand, permitting assertion of the nonparty defense in this case appears to be consistent with, if not mandated by, the initial sentence of
¶ 88 On the other hand, permitting assertion of the nonparty defense in the first answer—regardless of whether that answer is filed after the expiration of the limitation period on the plaintiff’s underlying claim—appears to conflict with the goal expressed in
¶ 89 Although valid arguments can be made in favor of USF’s position, there does not appear to be Indiana case law on point regarding application of
¶ 90 Under the specific facts of the Keppen action, we find that, as in Owens Corning,
¶ 91 We recognize that to permit the nonparty defense after the expiration of Keppen’s limitation period would bar her from later naming Hardin as a defendant in her underlying action against USF, which appears to conflict with the statutory goal of allowing plaintiffs a chance to sue directly any nonparty identified in affirmative defenses. Under different facts, рermitting the assertion of the nonparty defense in the first answer, regardless of the expiration of the claimant’s limitations period, could indeed be unfair in cases involving plaintiffs who,
¶ 92 Our interpretation of
¶ 93 Similarly, our reading of
¶ 94 Finally, in addressing USF’s argument that the trial court erred in finding that USF could not recover damages for that portion of the Keppen settlement that was paid by its insurer, our holding that the nonparty defense remained viable to USF renders this question moot. That is, since we have determined that USF cannot establish the elements of breach or proximate causation, summary judgment for Radogno is warranted regardless of the issue of damages.
¶ 95 Nevertheless, if we were pressed to address the issue, we would likewise affirm the trial court’s conclusion that the $3.65 million in settlement proceeds funded by USF’s insurer wоuld not be recoverable in this legal malpractice action. The trial court properly relied on our decision in Sterling Radio Stations, Inc. v. Weinstine, which held that a legal malpractice plaintiff could not rely on the collateral source rule to recover as damages settlement funds paid on his behalf by a separate entity. Sterling Radio Stations, Inc. v. Weinstine, 328 Ill. App. 3d 58, 64 (2002) (explaining that in a legal malpractice case, the recovery is “limited to the net amount paid by the plaintiff in the underlying action”). The Illinois Supreme Court decisions cited by USF for its argument that the collateral source rule should apply in this action concerned damages in the context of personal injury medical expenses. See Wills v. Foster,
¶ 96 For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.
¶ 97 Affirmed.