COMMERCIAL UNION INSURANCE CO v. THE STATE OF ILLINOIS (2002)

OPINION

This cause comes on for hearing upon the Motions for Re-Hearing filed by both the Claimant and the respondent. The court has carefully considered the arguments of the respondent regarding liability, and we find no compelling reason to change the opinion. Therefore the Motion for Re-Hearing filed by the respondent is denied.

The Court has also carefully considered the arguments of both Claimant and respondent as to damages. Because of the importance of the issue the Court also needs to clarify the timeliness of the filing of contribution claims due to the continued evolution of the law in that regard.

In its original Opinion this Court reduced the awards to the personal injury claimants based in part on the case of Continental Insurance and Norman Brothers v. State, 46 Ill.Ct.Cl. 26 (1993). In Continental Insurance, the insurance company was one of the Claimants. That case involved a subrogation claim for recovery of money that the insurance company had paid the other claimant. That Claimant was its insured, and had suffered a loss. The loss was caused by the actions of the State, and the insurance company, Continental Insurance, stood in the shoes of the claimant. We therefore applied a $100,000.00 statutory limit to damages to that cause of action.

In the Claimant's Motion for Re-Hearing in the present case, the Claimant correctly points out that the insurance company is not a subrogee but a Claimant with a claim for contribution. Here the Claimant insurance company has already paid damages because its insured was partly liable for damages which make up the underlying claim. The Claimant here seeks from the State contribution for the damages paid because of the partial liability of the State.

The issue then is whether the $100,000.00 tort limitation applies to a Claimant seeking contribution from the State. The statute in question prohibits the Court from paying more than $100,000.00 to or for the benefit of a single Claimant. In this case this insurance company has paid claims to more than one individual as a result of the underlying accident. To rule that an insurance company in such a situation faces the restriction of the $100,000.00 limit is illogical. An insurance company which has paid out in excess of $100,000.00 to more than one Claimant is entitled to an award of the State's share of the total amount of monies paid out. However, if the State's liability is based on contribution for any one individual to whom the insurance company has paid funds on behalf of its insured, then the limit of $100,000.00 would apply. This is because the original plaintiff, or injured party, could not have been awarded more than $100,000.00 had they sued the State directly. The insurance company should not be in a better position than the Claimant itself to recover from the State.

Based on the foregoing, we hold that an insurance company which is seeking contribution as a result of having paid claims to several Claimants is limited to a $100,000.00 award as to each specific claimant; the insurer is not limited to a total of $100,000.00. This ruling is specifically grounded in the language of the statute, 705 ILCS 505/8 which states ... that an award of damages in a case sounding in tort, ... shall not exceed the sum of $100,000.00 to or for the benefit of any plaintiff. Applying this standard to the specific facts in the present case, we find that as set forth in the Opinion the original amounts paid by the insurance were:

We then reduce these awards by fifty (50%) percent comparative fault, and award, the following amounts to be paid to the insurance company.

By way of illustration, if after reducing the award to a plaintiff Jannice Williams by 50% an award of over $100,000.00 would have resulted instead of $95,000.00, then the Court would have reduced that award to the maximum of $100,000.00. Those facts are not in evidence here, but the Court seeks to illustrate the law for clarity.

The Court now addresses two other issues which continue to come before it.

In the case of Hershey and Prairie Farms Dairy, Inc., v. State of Illinois, 49 Ill.Ct.Cl. 1 (1997), decided in 1990, this Court set forth a general rule for limitations as to contribution actions filed in the Court of Claims. A notice of intent to file a claim must be filed prior to the filing of a contribution complaint, unless the complaint itself was filed in a timely manner. The second rule was that the notice of intent had to be filed within one year of the good faith settlement and execution of a proper release, or within one year of being made a party to an underlying civil lawsuit. We further held there, that consistent with numerous cases, the release which would be the basis for a claim of contribution would have to specifically name and release the State of Illinois.

Subsequent to the filing of the Hershey opinion this Court decided the case of Kuhn v. State of Illinois, 45 Ill.Ct.Cl. 33 (1993). That case was decided May 17, 1993. The Court in Kuhn, supra, held correctly that if a claim was filed within the notice period no separate notice was necessary either in a contribution action or in a normal claim. The Court however went on to criticize Hershey. The Court believes that the criticism was misguided. The Court in the Kuhn opinion did not reflect that releases could be used to settle a cause of action even before a lawsuit was filed. Hence, one year from the effective date of release would not always be later than one year from having been made a party to a lawsuit. Cases are settled everyday in which lawsuits have not been filed prior to the settlement. There is no reason for the notice requirement in contribution actions to be different from the notice requirements in any other action, notwithstanding any language to the contrary in Kuhn.

Subsequent to Hershey and Kuhn, the Supreme Court of Illinois decided Guzman, et al., v. Epperson Construction, Inc., 195 Ill.2d 586, 259 Ill.Dec. 97 (2001), opinion filed June 21, 2000. That opinion interpreted in part 735 ILCS 5/13-204 as amended in 1994, effective January 1, 1995, which provided that no action for contribution or indemnity ... may be commenced more than 2 years after the party seeking contribution or indemnity has been served with process in the underlying action or more than 2 years from the time the party ... knew or should reasonably have known of an act or omission giving rise to the action for contribution or indemnity, whichever period expires later. 735 ILCS 5/13-204(b). That statute as applied to the Court of Claims, would hold that any action for contribution against the State of Illinois, which must be brought in the Court of Claims, would have to be commenced no more than 2 years after the party seeking contribution from the State was made a party; or 2 years from the time a party seeking contribution from the State knew or reasonably should have known of an act or omission giving rise to the action.

In this situation a party could be made aware of the alleged negligent acts or omissions to act on the part of the State after the party was served with process in the underlying action. Additionally the party seeking contribution could be aware of the alleged liability of the State prior to being served with process. In either event, when the later of the two periods run, the action would be barred in the Court of Claims. Using this statute along the rules previously set forth in Hershey, will prevent the situation from occurring in which a third party action would have to be filed before the underlying complaint was ever filed or served.

It should also be noted that the statute in question, as amended and effective on January 1, 1995, provides in paragraph (c) that the applicable limitations period contained in subsection (b) preempts, as to contribution and indemnity actions, over all other statutes of limitation or repose. We hold that this statute eliminates the necessity of filing a notice of claim within the one year statutory period before the Court of Claims in order to be able to file a claim for contribution within the 2 year statute of limitations in the Court of Claims.

Subsection (d) of the statute, 735 ILCS 5/13-204, provides that the statute is applied retroactively when substantially applicable. As the Court in Guzman concluded, the amended statute indicates that the trigger date for filing a third party action is the date of service or of knowledge of the wrongful act and omission whichever is later. This prevents a third party action from being time barred before the underlying action has been filed.

Therefore, in third party contribution actions before this Court hereafter, we specifically adopt 735 ILCS 5/13-204 and the opinions expressed in Guzman v. Epperson Construction, Inc., 195 Ill.2d 586, 259 Ill.Dec. 97 (2001), opinion filed June 21, 2000, and hold that any action for contribution or indemnity against the State of Illinois which shall lay in the Court of Claims the Claimant shall be required to file, without the necessity of a notice of intent to file a claim, within 2 years of the date the claimant has been served with process in the underlying action, or the date of knowledge of the wrongful act or omission of the State of Illinois, whichever period is later. This should eliminate any doubts as to the time said actions shall be required to be filed in the future.

PATCHETT, J.