Orejel v. York International Corp. ( 1997 )


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  • No. 1-96-0246
    Cons. 1-96-0306, 1-96-0307, 1-96-0309
    CIRILIO OREJEL and SALVADOR             )    APPEAL FROM THE
    VEGA, Indiv. and as Adm'r. of           )    CIRCUIT COURT OF
    the ESTATES OF J. JESUS OREJEL,         )    COOK COUNTY
    GRACIELA OREJEL, SR., SALVADOR          )
    OREJEL, ANGELICA OREJEL, J. JESUS       )
    OREJEL, JR., GRACIELA OREJEL, JR.,      )
    ERNESTO OREJEL, PATRICIA OREJEL,        )
    LUIS OREJEL, MARGARITA OREJEL,          )
    all Deceased,                           )
    )
    Plaintiffs-Appellees,                   )
    )
    v.                                 )
    )
    YORK INTERNATIONAL CORPORATION,         )
    INC., WILLIAM V. WANTUCK, d/b/a         )
    WANTUCK and SONS, GRAYSON CONTROLS,     )    No. 91 L 19861
    a Division of ROBERT SHAW CONTROL       )
    COMPANY, PEOPLES GAS LIGHT and COKE     )
    COMPANY, K and K HEATING and AIR        )
    CONDITIONING COMPANY, AMERICAN GAS      )
    ASSOCIATION,                            )
    )
    (YORK INTERNATIONAL CORPORATION, INC.,  )
    Counter-Plaintiff-Appellee; WANTUCK,    )
    d/b/a WANTUCK and SONS, GRAYSON         )
    CONTROLS, a Division of ROBERT SHAW     )
    CONTROL COMPANY, PEOPLES GAS LIGHT      )
    and COKE COMPANY, K and K HEATING and   )
    AIR CONDITIONING COMPANY, AMERICAN GAS  )    THE HONORABLE
    ASSOCIATION, Counter-Defendants-        )    IRWIN SOLGANICK
    Appellants).                            )    JUDGE PRESIDING.
    PRESIDING JUSTICE COUSINS delivered the opinion of the
    court:
    Plaintiffs, the independent administrators of the deceased
    brought wrongful death and survival claims to recover for the
    deaths of 10 family members who died as the result of carbon
    monoxide poisoning.  Defendant York International Corporation
    (York) entered a $10 million settlement agreement with
    plaintiffs, releasing York as well as other defendants from
    further liability.  Various defendants, including York, asserted
    counterclaims and third-party claims in the underlying action,
    which are still pending before the trial court. The trial court
    found that the settlement was made in good faith and was fair and
    reasonable in its amount.  Certain defendants appealed the trial
    court's decision, contending that: (1) the good-faith provisions
    of the Joint Tortfeasor Contribution Act (740 ILCS 100/0.01 et
    seq. (West 1992)) do not apply to the settlement reached between
    York and the plaintiffs; (2) the trial court erred in denying
    their right to have a jury determine the amount against which
    their contribution liability, if any, would be assessed; and (3)
    the trial court erred in refusing to require that York's
    insurance carrier be identified as a real party in interest in
    the prosecution of York's contribution counterclaim.
    York also appeals, contending that contribution defendant K&K
    Heating and Air Conditioning, Inc., failed to file a timely
    notice of appeal.
    BACKGROUND
    The underlying action brought by plaintiffs arises out of
    the deaths of J. Jesus Orejel, Sr., his wife, Graciela Orejel,
    Sr., and their eight children.  The Orejel family died of carbon
    monoxide asphyxiation on or about November 8, 1991, when a lethal
    level of carbon monoxide escaped into their home from a breach in
    the vent system of their furnace.  In their sixth amended
    complaint, plaintiffs, the independent administrators of the
    estates of the decedents, asserted claims of negligence and/or
    strict liability under the Illinois Wrongful Death Act (740 ILCS
    180/0.01 et seq. (West 1992)) and the Illinois Survival Act (755
    ILCS 5/27-6 (West 1992)) against the following corporations and
    individuals:  York; K&K Heating and Air Conditioning (K&K); Inc;
    Marzullo Furnace Supply Company (Marzullo); Jose Duenas d/b/a
    Airworks Heating and Cooling (Duenas); R&D Mechanical, Inc; David
    Grubisic; Joseph Grubisic; Grubisic Heating and Air Conditioning
    (R&D Mechanical); Grayson Controls (Grayson); William V. Wantuck,
    d/b/a Wantuck & Sons (Wantuck); All City Heating and Cooling,
    Inc. (All City); White Rodgers, Inc.; Park Heating & Air
    Conditioning Supply, Inc. a/k/a Park Supply, Inc. (Park Supply);
    Z-Flex U.S., Inc. (Z-Flex); Flexmaster Canada Ltd. (Flexmaster);
    Hart & cooley, Inc. (Hart & Cooley); and the American Gas
    Association (AGA).  The complaint alleged that the defendants
    were involved in the design, manufacture, certification, sale,
    distribution, installation, inspection, service and/or repair of
    the subject furnace and/or certain of its component parts.
    Plaintiffs alleged in their complaint that the decedents did
    not die instantly upon being exposed to the carbon monoxide
    emitted from the breached vent system but,instead, suffered great
    pain from the moment of their initial exposure until the time of
    their respective deaths, as evidenced by the location and
    condition in which each of the decedent's bodies was found.
    Plaintiffs further alleged that, between them, J. Jesus Orejel,
    Sr., and Graciela Orejel, Sr., left 17 surviving next of kin.
    On December 10, 1993, York filed counterclaims seeking
    contribution from each of the named defendants and filed a third-
    party complaint against the Peoples Gas Light and Coke Company
    (Peoples Gas), which had inspected the subject furnace on at
    least two occasions prior to the accident. Most other defendants
    also filed counterclaims against most, if not all, of their
    codefendants.
    In February and March of 1995, counsel for York contacted
    counsel for all codefendants (except those that were not known to
    have insurance coverage) and advised them that York was
    interested in assembling a settlement package to offer
    plaintiffs.  York would assume the lead in settlement
    negotiations with plaintiffs.  York's counsel also requested the
    names of the insurance representatives and sought their
    participation in a possible global settlement.  Thereafter, York
    contacted the various codefendants' insurers and/or counsel and
    sought their contribution to such a settlement.  However, York
    was met with strong resistance by other defendants and was
    unsuccessful.
    Nevertheless, York pursued settlement discussions with lead
    counsel for plaintiffs.  On April 19, 1995, following extensive
    negotiations, York and plaintiffs orally reached a settlement
    agreement to pay plaintiffs $10 million in exchange for
    plaintiffs' agreement to release and extinguish their claims
    against York and all other codefendants and third-party
    defendants so that York could preserve and pursue its
    contribution claims against all other defendants.  York and
    plaintiffs conditioned their agreement on the entry by the
    circuit court of an order finding that the agreement was made in
    good faith and was fair and reasonable in accordance with the
    Contribution Act. 740 ILCS 100/0.01 et seq. (West 1992).
    Plaintiffs also agreed to give York sufficient time to continue
    its efforts to seek the participation of all other defendants in
    contributing to the $10 million settlement and to resolve York's
    contribution claims.
    Following the oral settlement agreement with plaintiffs,
    counsel for York notified all defendants of the settlement and
    invited them to a meeting on May 11, 1995, to discuss the
    possibility of obtaining the participation of all defendants in
    the settlement.  Prior to this meeting, York and codefendant,
    Park Supply reached an agreement settling York's contribution
    claim against Park Supply for $300,000.  All other codefendants,
    except for White Rodgers, K&K, Duenas, and R&D Mechanical,
    attended the May 11, 1995, meeting.
    During the May 11, 1995, meeting, York's counsel and
    insurance representative discussed the circumstances surrounding,
    and the terms of, the settlement reached with plaintiffs and
    answered all questions related thereto.  Thereafter, York again
    urged all parties to participate in the settlement and, upon the
    request of several co-defendants, conducted separate meetings to
    discuss participation amounts.  Following this meeting, York
    continued settlement discussion with several of the codefendants.
    On July 12, 1995, York reached an agreement with another
    codefendant, Marzullo, to settle its contribution claim for
    $300,000.
    In September 1995, York and plaintiffs memorialized their
    prior oral agreement by executing a full release and settlement
    agreement.  This settlement provides, inter alia, that York
    agrees to pay $10 million in consideration of plaintiffs'
    compromise and full settlement and extinguishment of all of their
    claims against all defendants and third-party defendants, as well
    as other named potential tortfeasors; that York intends to
    retain, preserve, and fully pursue its rights of contribution
    against all defendants expressly identified in the settlement as
    well as any other released parties; and that the settlement is
    wholly conditioned upon the entry of a final order finding the
    settlement was made in good faith and was fair and reasonable
    pursuant to the Contribution Act.
    On October 19, 1995, York filed with the circuit court its
    motion for a good-faith finding concerning its settlement with
    plaintiffs and requested the court to:  dismiss all of
    plaintiffs' claims against all parties; enter a finding that the
    settlement was reached in good faith and was fair and reasonable
    in its amount; discharge York from any further liability from any
    other potential tortfeasors; and dismiss all of York's
    codefendants' claims against York.  Certain of York' codefendants
    opposed this motion, arguing that a good-faith finding was
    unnecessary under the circumstances presented and that, in any
    event, their right to a trial by jury required that a jury,
    rather than the trial court, determine whether the settlement was
    entered in good faith and was reasonable in its amount.  These
    codefendants also requested that the court substitute York's
    insurance carrier as the named plaintiff in the caption of this
    matter.
    York and the codefendants fully briefed York's motion, and
    on December 21, 1995, the circuit court conducted a hearing on
    the motion.  The court heard extensive argument on the motion
    and, at the conclusion of this hearing, granted York's motion in
    its entirety and denied the request to recaption this action.
    The court specifically ruled that it was appropriate for York to
    seek a good-faith finding with regard to the settlement and found
    that the $10 million settlement figure was reasonable.  The court
    also determined that, under Illinois law, those opposed to York's
    motion did not have a right to a jury trial to determine the
    amount of the damages.
    Notices of appeal were filed by Flexmaster, Wantuck,
    Grayson, Hart & Cooley, Peoples Gas, AGA, and K&K, and these
    appeals were subsequently consolidated.  Since the filing of this
    appeal, Hart & Cooley and Flexmaster have reached settlements
    with York.  Grayson, Peoples Gas, AGA, and K&K have adopted
    Wantuck's brief in whole or in part.  Specifically, Grayson has
    specifically not adopted Wantuck's constitutional argument that a
    jury, rather than the circuit court, should determine the
    reasonableness of the settlement amount.
    We affirm.
    ANALYSIS
    I
    The contribution defendants first contend that the trial
    court erred in determining that the Contribution Act's good-faith
    provision applied to York's settlement with plaintiffs. York
    argues that the good-faith provision does apply and, therefore,
    the court had authority to make a good-faith determination.
    The crux of this issue involves the interpretation of
    section 2 of the Illinois Joint Tortfeasor Contribution Act (the
    Act) (740 ILCS  100/2 (West 1992), which provides in pertinent
    part:
    "(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.
    (e) A tortfeasor who settles with a claimant pursuant
    to paragraph (c) is not entitled to recover contribution
    from another tortfeasor whose liability is not extinguished
    by the settlement."  740 ILCS 100/2(a),(b),(c),(d),(e)(West
    1992).
    In interpreting the above provision, this court has a duty to
    determine the intent of the legislature when enacting the statute
    and to enforce that intent.  Henry v. St. John's Hospital, 
    138 Ill. 2d 533
    , 541, 
    563 N.E.2d 410
    (1990).  Legislative history and
    case law reveal that the statute was enacted to serve two equally
    important policies:  first, it allows for an equitable sharing of
    damages among tortfeasors according to their relative
    culpability, and second, it encourages settlements.  Bowers v.
    Murphy & Miller, Inc., 
    272 Ill. App. 3d 606
    , 608, 
    650 N.E.2d 608
    (1995); Lowe v. Norfolk & Western Ry. Co., 
    124 Ill. App. 3d 80
    ,
    
    463 N.E.2d 792
    (1984).
    When read together, the above statutory sections entitle an
    insurer to recover contribution from a joint tortfeasor where the
    insurer has settled with a claimant and has obtained a release,
    given in good faith, that extinguishes both the tort liability of
    its insured and the liability of another tortfeasor.  Bituminous
    Insurance Cos. v. Ruppenstein, 
    150 Ill. App. 3d 402
    , 404, 
    501 N.E.2d 907
    (1986); Perez v. Espinoza, 
    137 Ill. App. 3d 762
    , 765,
    
    484 N.E.2d 1232
    (1985).  It is the good-faith nature of a
    settlement under section 2(c) of the Act that triggers the
    discharge of the settling tortfeasor's liability for contribution
    to any other tortfeasor under section 2(d).  Bowers, 272 Ill.
    App. 3d at 608. However, the Act does not define good faith.
    Whether a settlement was made in good faith must be determined by
    the trial court after consideration of all of the surrounding
    circumstances.  
    Bowers, 272 Ill. App. 3d at 608
    .  Once a
    preliminary showing of good faith is made, the burden shifts to
    the party challenging the settlement to establish that it was not
    made in good faith.  Wilson v. The Hoffman Group, Inc., 
    131 Ill. 2d
    308, 318-19, 
    546 N.E.2d 524
    (1989). A trial court's
    determination of good-faith will not be overturned absent an
    abuse of discretion.  Wilson, 
    131 Ill. 2d
    at 319.
    We note that the contribution defendants do not challenge
    the settlement between York and the plaintiffs on the basis that
    it was not made in good faith.  The contribution defendants argue
    that a good-faith finding is inapplicable to the instant case
    because York, settling on behalf of all defendants, no longer has
    any contribution exposure to any other entities.  Assuming
    arguendo that York no longer has contribution exposure to other
    entities, we consider the contribution defendants' contention
    that the good-faith finding is inapplicable to the instant case
    to be incorrect.
    Although the contribution defendants argue that the good-
    faith provision has never been applied, and is not intended to be
    applied, where a party settles the entirety of the plaintiff's
    claims against all tortfeasors, they cite no authority for this
    argument.  Furthermore, their argument is in derogation of case
    law.  For example, in Hall v. Archer-Daniels-Midland Co., 
    122 Ill. 2d 448
    , 
    524 N.E.2d 586
    (1988), plaintiff Hall sustained
    injuries at a construction site.  His estate sued Archer-Daniels-
    Midland Company (ADM), and Mid-States General and Mechanical
    Contracting Corporation (Mid-States), the erector of a catwalk.
    ADM in turn sued Mid-States and Hall's employer, Corrigan
    Company, for contribution.  Meanwhile, Hall settled all of his
    claims with ADM for $1.5 million and released all parties
    defendant. It appears that Corrigan did not consent to the
    settlement; however, neither Corrigan nor Mid-States objected to
    or challenged the good faith or reasonableness of the settlement.
    The matter proceeded to a jury trial on the proportionate faults
    of Mid-States, Corrigan, and ADM.  After the jury determined the
    parties to be at fault 49%, 40% and 12%, respectively, the trial
    court applied these proportions to the amount of the settlement
    plus workers' compensation benefits. On appeal, the court
    considered several issues, including Corrigan's assertion that
    ADM failed to show that the amount of the settlement was
    reasonable and made in good faith and that ADM therefore did not
    establish that it paid more than its pro rata share of the common
    liability.  The court held that the settlement reached by ADM and
    the plaintiff was in good faith and was reasonable, stating that:
    "In settling with the plaintiff and extinguishing the
    potential tort liability of the others, ADM undertook the
    collective liability of the parties for the injures at issue
    here, subject only to whatever success it might later have
    in its contribution actions against Mid-States and Corrigan.
    That circumstance would give rise to a presumption of good
    faith on the part of a contribution plaintiff who has
    settled the underlying tort action.  Whether ADM paid an
    amount in excess of its pro rata share of the common
    liability was the point decided by the jury in the trial of
    ADM's contribution claims, assuming that the amount of the
    settlement was appropriate.  And as we have already
    indicated, the amount of the settlement was reasonable, in
    light of Hall's injuries, and Corrigan and Mid-States did
    not attempt in the trial court to contradict the
    reasonableness or good faith of the settlement."  
    Hall, 122 Ill. 2d at 461
    .
    Therefore, in Hall, where a party settled on behalf of all
    other tortfeasors, the good-faith provision was applicable in
    determining whether the amount of the settlement was appropriate.
    An instructive case is Ziarko v. Soo Line R.R. Co., 
    161 Ill. 2d 267
    , 
    641 N.E.2d 402
    (1994), where defendant settled on behalf of
    itself and the remaining defendant, and the court held that the
    remaining defendant should have challenged the good-faith nature
    of the settlement if it did not believe that the settlement
    accurately reflected the parties' common liability to the
    plaintiff.  
    Ziarko, 161 Ill. 2d at 288
    .
    In the instant case, the good-faith provision was also
    applicable to determine whether the settlement amount or common
    liability was appropriate.  Although the settlement in Hall was
    postjudgment, "[n]owhere in the Contribution Act does the
    legislature distinguish between pretrial or post-judgment
    settlements."  Jessee v. Amoco Oil Co., 
    230 Ill. App. 3d 337
    ,
    347, 
    594 N.E.2d 1210
    (1992).  Under section 2(b) of the Act, both
    types of settlement agreements are treated identically, and both
    entitle the settling defendant to seek contribution from another
    tortfeasor whose liability to the injured plaintiff is also
    extinguished in the settlement agreement.  
    Ziarko, 161 Ill. 2d at 287
    .
    The contribution defendants assert that the purpose of the
    good-faith finding is to protect the settling defendant against
    contribution claims.  Therefore, they argue that the good-faith
    provision does not apply since York has no contribution claims
    against it.  However, this protection is afforded only when the
    trial court determines that the settlement amount was reasonable
    at a hearing on good faith.  We believe that a finding by the
    trial court that York's settlement with plaintiffs was made in
    good faith was necessary in order for York to pursue its
    contribution claims against other tortfeasors.
    We disagree with the contribution defendants' argument that
    a good-faith finding by the trial court in the instant case was
    neither necessary nor proper for York to terminate the
    plaintiffs' claims against it and to preserve its right to pursue
    contribution claims.  The policy of the Contribution Act is to
    encourage compromise and settlement in the absence of bad faith,
    fraud or collusion.  Mallaney v. Dunaway, 
    178 Ill. App. 3d 827
    ,
    
    533 N.E.2d 1114
    (1988).  "[N]othing is better calculated to
    frustrate and discourage settlements than the knowledge that the
    settlement lacks finality and will lead to further litigation and
    perhaps, to further liability."  Perez v. Espinoza, 
    137 Ill. App. 3d
    762, 765, 
    484 N.E.2d 1232
    (1985).  We believe that the
    contribution de