Dubina v. Mesirow Realty Development, Inc., 197 Ill. 2d 120

Summary

The Illinois Supreme Court held that settlements under the Joint Tortfeasor Contribution Act were not made in good faith where settling defendants received assignments of the plaintiffs’ claims against a nonsettling tortfeasor. The assignments deprived the nonsettling defendant of the full potential setoff, permitted the settling defendants to pursue contribution indirectly, and conflicted with the Act’s policies. The court affirmed the appellate court’s reversal of the trial court’s good-faith finding and reinstatement of the nonsettling defendant’s contribution claims.

Holdings

1. Settlement agreements that condition settlement on assignments of the plaintiffs' claims against nonsettling tortfeasors must be evaluated as a single transaction, and the agreements at issue were not made in good faith because they conflicted with the terms and policies of the Joint Tortfeasor Contribution Act.
2. The agreements violated the Act by allocating $4.5 million to the settlement and another $4.5 million to the assignments, thereby potentially limiting Litgen's setoff to less than the total consideration actually paid.
3. The agreements violated the Act because they allowed settling defendants, acting as assignees of the plaintiffs' claims, to pursue Litgen indirectly for amounts that the settling defendants could not recover directly as contribution.
4. The agreements were not loan-receipt agreements because they contained no loan or repayment obligation.
5. EMI was not entitled to a separate good-faith finding because its contribution was intermingled with the common fund used to finance both the settlement and the assignments.

Questions Presented

1. Whether settlement agreements conditioned on plaintiffs' assignment of their causes of action against nonsettling tortfeasors satisfy the good-faith requirement of the Joint Tortfeasor Contribution Act.
2. Whether the settlement-and-assignment transactions improperly deprive the nonsettling tortfeasor of its statutory setoff.
3. Whether the assignments allow settling tortfeasors to recover contribution indirectly in violation of the Act.
4. Whether the agreements should be treated as loan-receipt agreements that were valid because they preceded the Illinois Supreme Court's decision in In re Guardianship of Babb.
5. Whether the settling defendant that did not individually receive an assignment could receive a separate good-faith finding when all defendants' contributions were placed into an intermingled settlement fund.

Disposition

affirmed