Lead Opinion
Plaintiff, Scott Wilson, was injured in a roofing accident. He filed a two-count complaint, in the circuit court of Du Page County, against the general contractor of the project, The Hoffman Group, Inc. (Hoffman), alleging violations of the Structural Work Act (Ill. Rev. Stat. 1983, ch. 48, par. 60 et seq.) and negligence. Thereafter, Hoffman filed a six-count third-party complaint against Wilson’s employer, Ideal Roofing, Inc., Popko Management, Inc., and Popko Roofing and Insulation, Inc. (IdealPopko), seeking contribution for Ideal-Popko’s negligence and their violation of the Structural Work Act under “An
Wilson and Ideal-Popko entered into a settlement agreement whereby Ideal-Popko agreed to pay $24,000 in cash and waive their $149,737 statutory workers’ compensation lien in exchange for a release from liability from Wilson. The lien in question is statutorily imposed by section 5(b) of the Workers’ Compensation Act (Ill. Rev. Stat. 1983, ch. 48, par. 138.5(b)). Under section 5(b), an employee who has received workers’ compensation benefits is
The settlement agreement and release were conditioned upon a finding by the trial court that the settlement was in good faith within the meaning of section 2(c) of the Contribution Act. Hoffman objected to the
Wilson maintained the position that while the value of the workers’ compensation lien was sufficient consideration for purposes of the settlement agreement, it should not be considered as a setoff under section 2(c) of the Contribution Act. The trial court found that the plaintiff’s position was contrary to law and evidenced a lack of good faith on the part of the plaintiff, and refused to certify the settlement as being in good faith.
Subsequently, Wilson and Ideal-Popko waived the condition that a good-faith finding be entered, and consummated the settlement. The trial court refused to dismiss the third-party complaint pursuant to section 2(d) of the Contribution Act. However, the court found that the order involved a question of law as to which there was a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation (107 Ill. 2d R. 308(a)) and entered an order identifying and certifying the following questions of law for interlocutory review pursuant to Supreme Court Rule 308 (107 Ill. 2d R. 308):
“1. Whether the settlement agreement entered into between the plaintiff and the third party defendant, the terms of which were specified in the release documents considered by this court, was in good faith?
2. Whether, when the plaintiff contends the amount of the workmen’s compensation lien release should be considered by the court as consideration under the Contribution Act; should not the amount of said workmen’scompensation lien release have to also be considered under 2 — C of the Contribution Act as a set-off against any judgment entered in favor of plaintiff?
3. Whether plaintiff should be allowed a double recovery in that the third party defendant employers’ reimbursement will not diminish the sums to be collected under the judgment and plaintiff will enjoy collection of the judgment without giving the objecting non-settling defendants the right to any set-off as to said third party defendant employer’s reimbursement?
4. Should the waiver of the Workmen’s Compensation lien be considered in addition to the $24,000 new money as a set-off, if there should be a judgment against the remaining defendants?
5. Is the plaintiff’s position correct that only the ‘new money’ should be determinative as to what the amount of the set-off should be?”
Ideal-Popko’s Rule 308 application for interlocutory appeal was denied by the appellate court. We granted review pursuant to Supreme Court Rule 315(a) (107 Ill. 2d R. 315(a)).
We believe the five questions certified for appeal can be consolidated into two basic questions: (1) whether the settlement between the plaintiff and Ideal-Popko was in good faith pursuant to section 2(c) of the Contribution Act, and (2) whether the amount of the workers’ compensation lien should be set off against any subsequent judgment obtained by the plaintiff in accordance with section 2(c) of the Contribution Act. We answer both questions in the affirmative.
We begin by examining the relevant provisions of the Contribution Act. Section 2 of the Act provides in part:
“Right of Contribution, (a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, even though judgment has not been entered against any or all of them.
(b) The right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability, and his total recovery is limited to the amount paid by him in excess of his pro rata share. No tortfeasor is liable to make contribution beyond his own pro rata share of the common liability.
(c) When a release or covenant not to sue or not to enforce judgment is given in good faith to one or more persons liable in tort arising out of the same injury or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the release or the covenant, or in the amount of the consideration actually paid for it, whichever is greater.
(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor.” Ill. Rev. Stat. 1987, ch. 70, pars. 302(a) through (d).
Ideal-Popko contends that in accordance with these sections, the trial court should have found the settlement between the plaintiff and Ideal-Popko to have been in good faith and dismissed Hoffman’s third-party action for contribution against Ideal-Popko. In considering this argument, the first question we must answer is whether the settlement was made in good faith.
While this court has never specifically considered when a settlement between a plaintiff/employee and a third-party defendant/employer is made in good faith, several appellate court decisions have dealt with this issue. In LeMaster v. Amsted Industries, Inc. (1982),
LeMaster was decided before this court’s decision in Doyle v. Rhodes (1984),
Subsequently, in Ballweg v. City of Springfield (1986),
Relying on the holdings in Doyle and Ballweg, recent appellate court decisions have rejected the position adopted in LeMaster. In Dixon v. Northwestern Publishing Co. (1988),
The appellate court reached a similar conclusion in Ellis v. E.W. Bliss & Co. (1988),
We find that the position articulated in these appellate court cases is consistent with our decisions in Doyle and Ballweg, and overrule LeMaster, which was decided without the benefit of these decisions. In the present case, it is clear that Ideal-Popko are liable in tort to the plaintiff until they raise the defense of exclusive remedy under the Workers’ Compensation Act, and are potentially liable to Hoffman in contribution. It would be incongruous for us to hold that while an employer is subject to liability in tort under the Contribution Act, it cannot avail itself of the Act’s provisions to discharge that liability. Consequently, we hold that Wilson’s release constituted consideration under the Contribution Act and that its acceptance constituted a valid settlement between Wilson and Ideal-Popko.
Hoffman nonetheless contends that the settlement should not discharge Ideal-Popko from liability in contribution because it was not in “good faith” within the meaning of the Contribution Act. Hoffman argues that the parties’ bad faith is evidenced by the plaintiff’s insistence that only part of the consideration specified in the release be set off against any subsequent judgment.
The Contribution Act does not specifically define good faith; in determining whether an agreement was made in good faith, all of the surrounding circumstances must be considered. (Ballweg v. City of Springfield (1986),
We find that Hoffman has not met its burden of establishing a lack of good faith. The release in question is clear and explicit. It provides that:
“for and in consideration of the sum of TWENTY FOUR THOUSAND DOLLARS ($24,000), to us in hand paid, receipt of which sum is hereby acknowledged, and further for the consideration of the waiver of the Workmen’s Compensation lien in the amount of ONE HUNDRED FORTY NINE THOUSAND AND SEVEN HUNDRED AND THIRTY SEVEN DOLLARS ($149,737) [the Wilsons] DO HEREBY remise, release and forever discharge * * * [Ideal-Popko] from all claims * * *.”
Plaintiff was aware at the time he executed this release that section 2(c) of the Contribution Act requires that any subsequent recovery against the other tortfeasor be reduced to the extent of the consideration stated in the release, or in the amount actually paid for it, whichever is greater. (Ill. Rev. Stat. 1987, ch. 70, par. 302(c).) His argument that, contrary to the clear and unambiguous language of the release, he did not intend the lien waiver to constitute consideration for purposes of section 2(c) of the Contribution Act, reflects a unilateral or self-induced mistake on his part, which is not a valid ground for setting aside the release (Rakowski v. Lucente (1984),
Having determined that the settlement was made in good faith, we consider how it will affect the nonsettling defendant.
Hoffman and Ideal-Popko are in agreement that all of the consideration stated in the release should be set off from any judgment obtained by the plaintiff. As noted
Plaintiff proffers .two arguments as to why the amount of the lien should not be set off against any judgment he may obtain against Hoffman. First, he claims that his workers’ compensation recovery is money from a collateral source, which should not offset a judgment in an action based on negligence.
We find that Wilson is misapplying the collateral source rule. Under the collateral source rule, benefits received by the injured party from a source wholly independent of, and collateral to, the tortfeasor will not diminish damages otherwise recoverable from the tortfeasor. (Bernier v. Burris (1986),
We agree with Wilson that his recovery against Hoffman should not be reduced by virtue of the fact that he has been compensated by a collateral source. (See Bryntesen v. Carroll Construction Co. (1963),
Secondly, plaintiff contends that the amount of the workers’ compensation lien should not be set off because it is merely an expectancy of recovery which does not have monetary value, and that only the amount actually paid can be set off against a subsequent judgment. Since only $24,000 was actually paid, he claims that the amount of the setoff can only be $24,000.
We cannot accept this position. It is not necessary that a person waiving a cause of action receive satisfaction in money. Generally, anything of detriment to one side, or benefit to the other, may constitute sufficient consideration to support a settlement. (Smucker v. Larimore (1859),
While we find no merit in the plaintiff’s arguments, the issue remains as to whether the amount of the lien waiver should be set off against a subsequent recovery by the plaintiff. At this point, several policy considerations must be examined. The first policy is that of preventing double recovery.
The purpose of compensatory tort damages is to compensate the plaintiff for his injuries, not to punish defendants or bestow a windfall upon plaintiffs. (Peterson v. Lou Backrodt Chevrolet Co. (1979),
The second policy consideration involved is that of protecting the interests of nonsettling defendants. Illinois has a public policy of protecting the financial interests of nonsettling parties in a settlement, and sections 2(c) and (d) of the Contribution Act reflect that policy. (Palmer v. Avco Distributing Corp. (1980),
We note that a similar result was reached by the Court of Appeals for the Seventh Circuit in Stifle v. Marathon Petroleum Co. (7th Cir. 1989),
On appeal, Stifle argued that the amount of the workers’ compensation lien should not be set off from a later judgment because (1) at the time of settlement the lien had no value since it secured only a potential, prospective judgment, and (2) the worker’s compensation benefits were derived from a collateral source. (Stifle,
We are aware that there is also a count for breach of contract pending between Hoffman and Ideal-Popko. That count was not addressed by the trial court in its order and has not been considered on appeal.
For the reasons stated above, we conclude that the settlement between Wilson and Ideal-Popko was made in good faith, and that all of the consideration specified in the release, including the lien waiver of $149,737, should be set off against any subsequent judgment obtained by the plaintiff.
Certified questions answered; cause remanded.
Dissenting Opinion
dissenting:
The opinion of the majority states that it must overrule LeMaster v. Amsted Industries, Inc. (1982),
Doyle did not deal with the question before us, which is whether the settlement between the employer and the employee was made in good faith. Doyle dealt with the right of contribution between a third-party tortfeasor and the employer. A majority of this court, in Doyle, concluded that the employer was “subject to liability in tort” within the meaning of the Contribution Act, unless the employer asserted the defense of the Workers’ Compensation Act, and therefore the Contribution Act applied. I will discuss this further later in this dissent.
In our case, we find an employer paying to an employee $24,000 and, in addition, giving the employee a waiver of the statutory workers’ compensation lien in the amount of $149,973. What was the consideration given in return by the employee to the employer? There was none. If the employee had made a demand on the employer for a settlement of his tort claim, or if he would have sued the employer, all the employer had to do was to draft a simple answer stating that the employer was not liable in damages because of the provisions of section 5(a) of the Workers’ Compensation Act (Ill. Rev. Stat. 1987, ch. 48,
As further evidence that there was no consideration for this settlement, I point out that the settlement discloses that plaintiff received from the employer both compensation under the Workers’ Compensation Act and payment for a common law claim. The settlement releases a claim under the Workers’ Compensation Act, which shows that the plaintiff has received or is receiving compensation payments. The $24,000 cash payment, plus the release of the lien, is payment for a common law tort claim. Section 11 of the Workers’ Compensation Act (Ill. Rev. Stat. 1987, ch. 48, par. 138.11) states that “[t]he compensation herein provided, together with the provisions of this Act, shall be the measure of responsibility of any employer ***.” This language, to me, means that an employee cannot collect both compensation payments and payments under a common law tort claim from the employer, or at least if he does, he has given the employer no consideration for the additional payment. This court addressed the double payment question in Rhodes v. Industrial Comm’n (1982),
We are, in this case, making bad law to correct an inequity caused by what I perceived, and continue to believe to be, the bad law of Doyle. The employer hiere was trying to shield itself from the contribution claim of the
This court should think seriously about reconsidering Doyle. I pointed out in my dissent in that case what I considered to be the faulty logic of the holding. In Mason v. F. Lli Luigi & Franco Dal Maschio (7th Cir. 1987),
I noted above that the employer in this case was simply trying to protect itself against the holding of Doyle. Thus, in Doyle, the pro-contribution advocates prevailed. The question presented to us in this case results from tactics adopted by the anti-contribution forces to protect against Doyle. Next we will find the pro-contribution forces devising new tactics to offset the holding of this case. Instead of perpetuating this merry-go-round, I suggest that we end this chase by providing a merciful demise for Doyle.
For the reasons stated above, I respectfully dissent.
