Dubina v. Mesirow Realty Development, Inc., 197 Ill. 2d 185

756 N.E.2d 836 (Ill. 2001) · Supreme Court of Illinois · July 26, 2001 · No. No. 88623

Summary

The Supreme Court of Illinois held that settlement agreements conditioned on plaintiffs' assignment of claims against a nonsettling tortfeasor to settling defendants did not satisfy the good-faith requirement of the Joint Tortfeasor Contribution Act. The arrangements deprived the nonsettling defendant of the statutory setoff, undermined equitable allocation of damages, and allowed settling defendants to pursue contribution indirectly. The court affirmed the appellate court's reversal of the circuit court's good-faith finding and reinstatement of the nonsettling defendant's contribution claims.

Holdings

  1. Settlement agreements that condition settlement on assignments of claims against a nonsettling tortfeasor to settling defendants do not satisfy the good-faith requirement when, considered as a whole, they conflict with the terms and policies of the Joint Tortfeasor Contribution Act.
  2. The agreements violated the Contribution Act because allocating $4.5 million to settlement and an additional $4.5 million to assignments could limit Litgen's setoff to $4.5 million even though the settling defendants paid $9 million in total consideration.
  3. The assignments improperly allowed settling defendants to pursue contribution from Litgen indirectly by suing in the guise of the assigned plaintiffs.
  4. The settlement-and-assignment agreements were not loan-receipt agreements because they contained no loan or repayment obligation.
  5. EMI's settlement could not be separately found to have been made in good faith because EMI's contribution was part of a common, intermingled settlement fund used for both settlement payments and assignments.

Questions Presented

  1. Whether settlement agreements that condition settlement on assignments of the plaintiffs' claims against a nonsettling tortfeasor to settling defendants satisfy the Joint Tortfeasor Contribution Act's good-faith requirement.
  2. Whether the settlement-and-assignment arrangements improperly deprived Litgen of its statutory setoff and allowed settling defendants to recover contribution indirectly.
  3. Whether the agreements should be treated as valid loan-receipt agreements under In re Guardianship of Babb because they predated that decision.
  4. Whether Economy Mechanical Industries, Inc.'s settlement could independently be found to have been made in good faith because EMI did not personally receive an assignment.

Disposition

affirmed

Cases Cited (8)

  • Dubina v. Mesirow Realty Development, Inc., 178 Ill. 2d 496, 227 Ill. Dec. 389, 687 N.E.2d 871 (1997)(followed)
  • Dubina v. Mesirow Realty Development, Inc., 308 Ill. App. 3d 348, 241 Ill. Dec. 681, 719 N.E.2d 1084 (1999)(affirmed)
  • Dubina v. Mesirow Realty Development, Inc., 283 Ill. App. 3d 36, 218 Ill. Dec. 551, 669 N.E.2d 694 (1996)(superseded)
  • In re Guardianship of Babb, 162 Ill. 2d 153, 205 Ill. Dec. 78, 642 N.E.2d 1195 (1994)(followed)
  • Solimini v. Thomas, 293 Ill. App. 3d 430, 227 Ill. Dec. 875, 688 N.E.2d 356 (1997)(not adopted by majority)
  • Wilson v. Hoffman Group, Inc., 131 Ill. 2d 308, 137 Ill. Dec. 579, 546 N.E.2d 524 (1989)(not adopted by majority)
  • Pasquale v. Speed Products Engineering, 166 Ill. 2d 337, 211 Ill. Dec. 314, 654 N.E.2d 1365 (1995)(not adopted by majority)
  • Grunloh v. Effingham Equity, Inc., 174 Ill. App. 3d 508, 124 Ill. Dec. 140, 528 N.E.2d 1031 (1988)(not adopted by majority)

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