EZ PRODUCTS INC v. THE STATE OF ILLINOIS (2001)

OPINION

This cause comes on for hearing upon the Respondent's Motion to Dismiss, and the Claimant's Motion to Strike the Motion to Dismiss. We will take up the Motion to Strike the Motion to Dismiss first. A Commissioner of this Court ordered that all motions with reference to pleadings be filed within fourteen days of the pre-trial that was held June 12, 1999. The Respondent filed a Motion to Dismiss on August 30, 1999. While this is a violation of the order of the Commissioner, the Court refuses to strike the Motion to Dismiss. The Motion to Dismiss raises the issue of failure to file a notice, which is a condition precedent to the filing of an action in the Court of Claims, and not a Statute of Limitations. For this reason, we must deal with the underlying issue once it has been brought to the Court's attention. We do not, by this, condone the habit of the Respondent in failing to comply with Orders of this Court regarding the timeliness of filings.

As for the Motion to Dismiss, it is grounded on the argument that a Notice of Intent to File a Contribution Action must be filed in the Court of Claims within one year rather than two as dictated in the Contribution Act. There are two leading cases in the Court of Claims regarding the Court's attempt to fashion a procedure to handle contribution actions in light of the immunity of the state and the limited jurisdiction of this Court. They are Hershey v State of Illinois, 43 Ill.Ct.Cl. 108 (1990) and Kuhn v State of Illinois, 45 Ill.Ct.Cl. 33 (1993).

In Hershey, this Court ruled that a notice of intent to file a claim is a condition precedent to filing a claim for contribution. The Court further held that the notice of intent must be filed within one year of the good faith settlement and execution of a proper release, or within one year of being made party to the underlying civil law suit.

Three years later the Court considered Kuhn. We feel now that the Court was mistaken in questioning Hershey, in that the Court there held that the party seeking contribution in this Court would have been a party in the underlying action, and would have been a party before execution of the releases. This ignores the fact that a claim of contribution or indemnity can be brought without there having been an underlying action. This is why the Statute of Limitation for a claim of contribution or indemnity may be triggered by payment and discharge of liability of a Claimant, or the Claimant being made a defendant in an underlying action. See 735 ILCS 5/13-204(a).

In any event, the Court modified the previous rule of Hershey by holding that a notice of a claim for contribution must be filed within one year of settlement of an underlying action. The Court also held that the Court must make a finding of and an apportionment of liability in an action in which there was no notice filed prior to the execution of releases. We feel that the Court must do this in every case, not just in the cases where no notice is filed prior to the execution of releases in an underlying action.

In any event, after both Hershey and Kuhn were decided, the Illinois General Assembly passed Public Act 88-538, effective January 1, 1995, which drastically altered the Illinois Statute on Contribution and Indemnity. We set forth the Statute as it reads today in its entirety:

/13-204. Contribution and indemnity.

(a) In instances where no underlying action seeking recovery for injury to or death of a person or injury or damage to property has been filed by a claimant, no action for contribution or indemnity may be commenced with respect to any payment made to that claimant more than 2 years after the party seeking contribution or indemnity has made the payment in discharge of his or her liability to the claimant.

(b) In instances where an underlying action has been filed by a claimant, 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, or his or her privy, knew or should reasonably have known of an act or omission giving rise to the action for contribution or indemnity, whichever period expires later.

(c) The applicable limitations period contained in subsection (a) or (b) shall apply to all actions for contribution or indemnity and shall preempt, as to contribution and indemnity actions only, all other statutes of limitation or repose, but only to the extent that the claimant in an underlying action could have timely sued the party from whom contribution or indemnity is sought at the time such claimant filed the underlying action, or in instances where no underlying action has been filed, the payment in discharge of the obligation of the party seeking contribution or indemnity is made before any such underlying action would have been barred by lapse of time.

(d) The provisions of this Section, as amended by Public Act 88-538, shall be applied retroactively when substantively applicable, including all pending actions without regard to when the cause of action accrued; provided, however, that this amendatory Act of 1994 shall not operate to affect statutory limitations or repose rights of any party which have fully vested prior to its effective date.

(e) The provisions of this Section shall not apply to any action for damages in which contribution or indemnification is sought from a party who is alleged to have been negligent and whose negligence has been alleged to have resulted in injuries or death by reason of medical or other healing art malpractice.

The Court is bound to follow in its pleadings and practice the Illinois Code of Civil Procedure and the rules of the Supreme Court of Illinois. Accordingly, we find that this Court is bound by the statute previously cited regarding contribution and indemnity. Yet the Court is also bound by 705 ILCS 505/22-1 and 22-2 which provide for notice in actions for personal injury, and the failure and dismissal for failure to file a notice. We must therefore construe the statutes with prior cases of both our Court, and the Appellate and Supreme Courts regarding the issues of contribution and indemnity.

In the present case an underlying action was filed on November 2, 1994. The Claimant, Defendant in the underlying action, filed his complaint for contribution on August 1, 1996, within two years after being made a defendant in the underlying action. The statute governing contribution and indemnity, 735 ILCS 5/13-204 (d) provides that the provisions will be applied retroactively except if statute of limitations or repose rights of any party are fully vested prior to the effective date of the amendment. Construing that section of the statute along with Kuhn, the law in the Court of Claims on contribution until now, we find that the rights of the parties as to limitations were not fully vested on January 1, 1995, and therefore the statute on contribution and indemnity 735 ICLS 5/13-204 applies.

The Court notes also that in the case of Lin v City of Chicago, 276 Ill.App.3d 13, 657 N.E.2d 8, 212 Ill. Dec. 313, 314 (Ill.App.1 Dist.1995), the appellate court indicated that it would have applied the two year statute of limitation contained in the above statute in an action against the city, which is normally governed by a one year statute of limitation. They refrained from doing so as the rights of the parties in that case were in fact vested prior to January 1, 1995. For the reasons stated above, we therefore hold that our prior rulings in Hershey and Kuhn as they related to contribution actions in the Court of Claims are no longer valid due to passage by the Illinois Legislature of the Contribution and Indemnity Limitation Act. We hold that pursuant to that act, actions or claims seeking contribution or indemnity from the State of Illinois may be commenced without the notice provision being applicable, so long as they are commenced consistent with the limitations contained in 735 ILCS 5/13-204 (a) (b) and (c).

It is interesting to note that paragraph (c) of the statute states that the two year statute shall apply to all claims for contribution and indemnity and preempts, as to contribution and indemnity actions only, all other statutes and limitations of repose. It, however, adds the limitation that it is only to the extent that the original claimant in an underlying action could have timely sued the party from whom contribution or indemnity is sought at the time such original claimant filed the underlying action; or in instances where no underlying action has been filed, the payment and discharge of the obligation of the party seeking contribution or indemnity is made before any such underlying action would have been barred by the lapse of time. Applying this paragraph of the statute in question to the Court of Claims Rules, we hold that an action or claim for contribution or indemnity shall be timely, without the necessity of notice, if filed within two years after the party seeking contribution or indemnity has made payment and discharged the liability to the original claimant; or the party seeking contribution or indemnity from the State has been served with service of process within two years prior to the filing of a claim for contribution in the Illinois Court of Claims, or within two years from the time the party or a person in his or her privy, knew or reasonably should have known of an act or omission giving rise to an action for contribution or indemnity, whichever period expires later.

Therefore, specifically, an action or claim for indemnity contribution is timely if the original claimant in the underlying action, if any, could have timely sued the State for contribution, or at the time payment and discharge of the obligation of the party seeking contribution is made, no such action would have been barred by the lapse of time. Further applying that statute then to the contribution action, it is clear that when the claimant in the underlying cause of action files a claim within one year of the act or omission which would give rise to the liability on the part of the State, or payment is made to the underlying claimant and discharged of an obligation within one year of the act or omission to act, then the party seeking contribution shall have a two year period of limitations in which to file.

In summary, we hold that the statute in question, Illinois 735 ILCS 5/13-204 applies to contribution actions in which the underlying cause of action has been filed within one year of the accrual of the act or the omission to act, or when payment or discharge of the obligation of the party seeking contribution or indemnity has been made within one year of the act or omission to act which is the basis for liability. If the original underlying claim, established either by the filing of a lawsuit, or by the payment and discharge of the obligation of the party seeking contribution is made beyond one year from the act or omission to act which is the basis for liability, then the two year statute of limitations set forth in the above statute 735 ILCS 5/13-204 shall not apply, and the parties shall be governed by the case of Hershey v State of Illinois, 43 Ill. Ct. Cl. 108 (1990) in defining, or in looking for guidance, about the definition of a timely claim for contribution.

For the reasons stated above we therefore deny the Motion to Dismiss.

PATCHETT, J.