-
NOTICE: Under Supreme Court Rule 367 a party has 21 days after the filing of the opinion
to request a rehearing. Also, opinions are subject to modification, correction or withdrawal at
anytime prior to issuance of the mandate by the Clerk of the Court. Therefore, because the
following slip opinion is being made available prior to the Court's final action in this matter,
it cannot be considered the final decision of the Court. The official copy of the following
opinion will be published by the Supreme Court's Reporter of Decisions in the Official
Reports advance sheets following final action by the Court.
Nos. 80303, 80304 cons.--Agenda 21--September 1996.
ALFRED RAMSEY v. DAVID J. MORRISON, Appellee (Ricky Baker et al.,
Appellants).
Opinion filed February 6, 1997.
JUSTICE BILANDIC delivered the opinion of the court:
The primary issues in this appeal concern the application of
this court's decision in Kotecki v. Cyclops Welding Corp., 146 Ill.
2d 155 (1991). We are asked to determine: (1) whether a third party
sued by an injured employee may recover contribution from a
coemployee who is immune from a direct suit by the employee under
section 5(a) of the Workers' Compensation Act (820 ILCS 305/5(a)
(West 1992)), and (2) how an employer's contribution liability
under Kotecki is calculated with relation to the attorney fees and
costs provision of section 5(b) of the Workers' Compensation Act
(820 ILCS 305/5(b) (West 1992).
FACTS
On April 10, 1991, third-party defendant Ricky Baker was
driving a truck northbound on a two-lane roadway when he collided
with a southbound vehicle driven by the defendant, David Morrison.
The plaintiff, Alfred Ramsey, was a passenger in Ricky Baker's
truck and he sustained a broken jaw as a result of the collision.
Both the plaintiff and Ricky Baker were employees of third-party
defendant Tony Baker, d/b/a Baker's Auto Repair, who is also
Ricky's father. The parties stipulated that both the plaintiff and
Ricky Baker were acting within the scope of their employment at the
time of the accident.
The plaintiff received compensation for his injury under the
Workers' Compensation Act (820 ILCS 305/1 et seq. (West 1992)) from
his employer, Tony Baker, d/b/a Baker's Auto Repair. On September
20, 1991, the plaintiff filed suit against David Morrison in the
circuit court of Madison County, charging that Morrison's
negligence caused the collision. Morrison thereafter filed a third-
party complaint for contribution against Ricky Baker, alleging that
Ricky Baker's negligence caused the collision. This third-party
complaint incorrectly alleged that Ricky Baker was the employer of
the plaintiff. Subsequently, however, Morrison filed an amended
third-party complaint adding a claim for contribution against Tony
Baker, as the plaintiff's employer. The amended third-party
complaint retained the claim for contribution against Ricky Baker,
the plaintiff's coemployee. The complaint charged that Ricky
Baker's negligence caused the collision, and that Tony Baker, as
Ricky Baker's employer, was vicariously liable for Ricky Baker's
negligence.
Tony Baker moved to dismiss the amended third-party complaint
on the ground that it was untimely filed. The trial court denied
the motion. The record also contains an order denying Ricky Baker's
motion to dismiss the third-party complaint, although the record
does not contain a motion to dismiss filed by Ricky Baker.
The case proceeded to trial before a jury between April 4 and
8, 1994. At trial, differing accounts of the accident were
presented by the plaintiff, Ricky Baker, and Morrison. However, a
Madison County deputy sheriff who investigated the accident
testified that both Morrison's and Ricky Baker's vehicles had gone
over the center line of the road before the collision.
On April 8, 1994, the jury returned a verdict in favor of the
plaintiff and against the defendant, Morrison, assessing the
plaintiff's damages at $70,708.49. The jury also found in favor of
Morrison and against Ricky and Tony Baker on Morrison's third-party
complaint. The jury apportioned liability as follows: 50% to
Morrison and 50% to Ricky and Tony Baker. The trial judge issued an
order adjudicating the employer's liability under the Workers'
Compensation Act at $27,457.36.
All parties except the plaintiff filed post-trial motions. The
defendant, Morrison, also filed a separate motion for judgment on
his contribution verdicts against Ricky and Tony Baker. Ricky
Baker's post-trial motion argued, inter alia, that he could not be
liable for contribution to Morrison because he was immune as the
plaintiff's coemployee. The trial judge agreed and entered judgment
in favor of Ricky Baker. Tony Baker's post-trial motion argued,
inter alia, that his motion to dismiss Morrison's third-party
action on the ground of timeliness should have been granted. The
trial court granted Tony Baker's motion on this basis and entered
judgment in his favor. Based upon these rulings, Morrison's motion
for judgment on his contribution verdicts was denied. The trial
court did, however, rule conditionally on the issue of the limit of
employer Tony Baker's contribution liability, pursuant to section
2--1202(f) of the Code of Civil Procedure (735 ILCS 5/2--1202(f)
(West 1992)). The trial court resolved this issue by holding that
the workers' compensation benefits paid to the plaintiff by the
employer constituted the full extent of the employer's liability,
and the employer should pay nothing further to the plaintiff or to
Morrison. The court also determined, however, that the plaintiff
was entitled to collect 25% of that amount for his attorney fees
pursuant to section 5(b) of the Workers' Compensation Act (820 ILCS
305/5(b) (West 1992)). The trial court therefore held that the
amount of the set-off Morrison was entitled to receive as a result
of his contribution judgment against the employer would be reduced
by 25% for the section 5(b) fees, to equal 75% of the workers'
compensation benefits paid.
Morrison appealed, and the appellate court reversed. 276 Ill.
App. 3d 111. The appellate court held first that the trial court
abused its discretion in granting the employer's post-trial motion
to dismiss Morrison's third-party action, finding no prejudice to
the employer resulting from the timing of the third-party
complaint. The appellate court also held that the trial court
abused its discretion in granting coemployee Ricky Baker's post-
trial motion to dismiss. The appellate court concluded that a
coemployee's immunity under the Workers' Compensation Act does not
bar an action for contribution against him. Last, the appellate
court reversed the trial court's determination that Morrison's
contribution judgment against the employer should be reduced by 25%
for the attorney fees obligation under section 5(b). The court held
that an employer's contribution liability is limited only to the
amount of workers' compensation benefits paid, with no reduction
for section 5(b) fees. The appellate court remanded the cause for
reinstatement of the judgment in favor of Morrison and against
Ricky and Tony Baker.
We granted the petitions for leave to appeal filed by the
employer, Tony Baker, and by the coemployee, Ricky Baker, and
consolidated the two cases for our review. 155 Ill. 2d R. 315. We
now affirm in part and reverse in part the appellate court's
judgment.
ANALYSIS
I
We first consider whether the trial court correctly dismissed
Morrison's contribution action against Ricky Baker, the plaintiff's
coemployee, on the ground that the coemployee was immune from
liability. We hold that the trial court correctly dismissed
Morrison's contribution action against the plaintiff's coemployee.
As noted, at the time of the accident, Ricky Baker and the
plaintiff were employees of Baker's Auto Repair and were acting in
the course of their employment. Under these circumstances, Ricky
Baker, as a coemployee, is immune from a common law negligence suit
by the plaintiff pursuant to section 5(a) of the Workers'
Compensation Act. Section 5(a) provides, in pertinent part:
"No common law or statutory right to recover damages
from the employer *** or the agents or employees of ***
[the employer] for injury or death sustained by any
employee while engaged in the line of his duty as such
employee, other than the compensation herein provided, is
available to any employee who is covered by the
provisions of this Act ***." 820 ILCS 305/5(a) (West
1992).
This section operates to make workers' compensation benefits the
exclusive remedy of an injured employee against a negligent
coemployee acting in the course of his or her employment. Fregeau
v. Gillespie, 96 Ill. 2d 479, 484 (1983); Rylander v. Chicago Short
Line Ry. Co., 17 Ill. 2d 618, 628 (1959) (Workers' Compensation Act
bars action by injured employee against coemployee based on
coemployee's negligence in the course of his or her employment).
The plaintiff has not attempted to directly sue the coemployee for
his injuries. Rather, the plaintiff sued a third party, Morrison,
who in turn sought contribution toward that liability from the
coemployee. The issue here presented, then, is whether a third
party sued by an injured employee may recover contribution from a
coemployee who is immune from a direct suit by the plaintiff.
The right to contribution is premised on the notion that a
party should not be forced to pay more than its proportionate share
of a liability shared with another culpable party. The right to
contribution, however, will occasionally clash with an immunity
from direct suit possessed by the party from whom contribution is
sought. This court in Doyle v. Rhodes, 101 Ill. 2d 1 (1984), held
that a party's immunity from direct suit by the plaintiff may not
necessarily immunize that party from a contribution claim by a
defendant sued by the plaintiff. In Doyle, it was held that the
immunity from suit by an injured employee granted to an employer
under the Workers' Compensation Act did not preclude a contribution
action against the employer by a third party sued by the employee.
Doyle, 101 Ill. 2d at 14.
The right of contribution will not always prevail over the
competing immunity. Rather, our courts balance the policy
considerations supporting contribution against those supporting
immunity to determine which doctrine should prevail in a particular
case. See, e.g., Buell v. Oakland Fire Protection District Board,
237 Ill. App. 3d 940, 943-44 (1992) (balancing the policies
underlying the statutory immunity granted to public rescue services
versus those supporting contribution and holding that the immunity
should prevail); Stephens v. Cozadd, 159 Ill. App. 3d 452, 458-59
(1987) (holding that the public policy considerations supporting
public officials' immunity required that the immunity be applied to
bar contribution actions as well as direct actions); Hartigan v.
Beery, 128 Ill. App. 3d 195, 198-99 (1984) (holding that the
policies underlying parent-child immunity were outweighed by the
policies supporting contribution); Moon v. Thompson, 127 Ill. App.
3d 657, 659 (1984); Larson v. Buschkamp, 105 Ill. App. 3d 965, 969-
71 (1982).
We performed such a balancing inquiry in the workers'
compensation setting in Kotecki v. Cyclops Welding Corp., 146 Ill.
2d 155 (1991). In Kotecki, this court considered the amount of
contribution which a third party sued by an injured employee could
obtain from the plaintiff's employer. Kotecki, 146 Ill. 2d at 164-
65. In addressing this issue, Kotecki acknowledged that there was
an "underlying controversy between workers' compensation and
contribution." Kotecki, 146 Ill. 2d at 162. This court identified
the competing interests of the employer versus the third party as
follows:
" ``If contribution or indemnity is allowed [from the
employer], the employer may be forced to pay his
employee--through the conduit of the third-party
tortfeasor--an amount in excess of his statutory workers'
compensation liability. This arguably thwarts the central
concept behind workers' compensation, i.e., that the
employer and employee receive the benefits of a
guaranteed, fixed-schedule, nonfault recovery system,
which then constitutes the exclusive liability of the
employer to his employee. [Citation.] If contribution or
indemnity is not allowed, a third-party stranger to the
workers' compensation system is made to bear the burden
of a full common-law judgment despite possibly greater
fault on the part of the employer. This obvious inequity
is further exacerbated by the right of the employer to
recover directly or indirectly from the third party the
amount he has paid in compensation regardless of the
employer's own negligence. [Citations.] Thus, the third
party is forced to subsidize a workers' compensation
system in a proportion greater than his own fault and at
a financial level far in excess of the workers'
compensation schedule.' " Kotecki, 146 Ill. 2d at 162-63,
quoting Lambertson v. Cincinnati Corp., 312 Minn. 114,
119-20, 257 N.W.2d 679, 684 (1977).
We struck a balance between these competing interests in Kotecki by
allowing the third party to obtain contribution from the employer,
but only up to the amount of the employer's worker's compensation
liability. That balance substantially preserved the employer's
immunity under the workers' compensation scheme by limiting the
employer's liability for contribution. The third party's right to
contribution, on the other hand, was only partially preserved. As
we explained:
" ``[This approach] allows the third party to obtain
limited contribution, but substantially preserves the
employer's interest in not paying more than workers'
compensation liability. While this approach may not allow
full contribution recovery to the third party in all
cases, it is the solution we consider most consistent
with fairness and the various statutory schemes before
us.' " Kotecki, 146 Ill. 2d at 165, quoting Lambertson,
312 Minn. at 130, 257 N.W.2d at 689.
Thus, to some extent, preserving the policies underlying the
workers' compensation system took precedence over the third party's
right to contribution in Kotecki.
We must conduct a similar balancing of policies to determine
whether the third party's right to contribution should prevail over
the immunity granted to coemployees by the Workers' Compensation
Act. We hold that coemployee immunity is an important facet of the
workers' compensation system which must prevail over the third
party's right to contribution.
Coemployee immunity has been recognized as integral to a basic
purpose of our workers' compensation system. This court has
repeatedly noted:
"[T]he basic purpose of workmen's compensation [is] to
place the cost of industrial accidents upon the industry.
That purpose would be blunted if the cost of those
accidents was shifted from one employee to another within
the industry. So far as persons within the industry are
concerned, the Workmen's Compensation Act eliminated
fault as a basis of liability." Rylander v. Chicago Short
Line Ry. Co., 17 Ill. 2d 618, 628 (1959).
See also Meerbrey v. Marshall Field & Co., 139 Ill. 2d 455, 469
(1990); Fregeau v. Gillespie, 96 Ill. 2d 479, 484 (1983).
Similarly, this court has observed:
"[If coemployee immunity were not recognized] an employee
who has inadvertently injured a fellow worker would be
forced to bear the sole cost of defending and satisfying
the common-law action without any part of the cost being
passed on to the industry, since the common employer's
liability is expressly limited to the compensation award.
[Citation.] In view of the fact that a considerable
portion of industrial injuries can be traced to the
negligence of a coworker, such litigation could reach
staggering proportions, and would not only tend to
encourage corrupt and fraudulent practices but would also
disrupt the harmonious relations which exist between
coworkers. The avoidance of such results is most
certainly beneficial to the employee." O'Brien v.
Rautenbush, 10 Ill. 2d 167, 174 (1956), overruled on
other grounds, Rylander, 17 Ill. 2d at 628.
See also Mitsuuchi v. City of Chicago, 125 Ill. 2d 489, 495 (1988).
Accordingly, this court has recognized that the immunity
granted to coemployees under our workers' compensation system is
not merely gratuitous, but is tied to a basic purpose of workers'
compensation.
The highest court of a sister state has written expansively on
this principle. Madison v. Pierce, 156 Mont. 209, 478 P.2d 860
(1970). We find that court's comments on the policies underlying
coemployee immunity to be instructive:
"The broad purpose of the Montana Workmen's
Compensation Act is to substitute a system for the
payment of medical costs and wage losses to injured
employees without regard to fault, for the common law
system of legal action by the injured employee against
the one whose negligence proximately caused his injury.
The principle behind this legislation was that the
business enterprise or industry should directly bear the
costs of injury to its employees in the same manner as
the enterprise has always borne the costs of maintaining
and repairing its plant, machinery and equipment.
* * *
If [the Act] were construed to withhold immunity to
a coemployee from a negligence action, the cost of injury
to an employee of the business would be shifted from the
employer, where the Act places it, to a fellow employee,
where the Act does not place it. It also would defeat the
ultimate payment of injury cost by the public purchasing
the product. *** We cannot believe the legislature
intended to permit the ultimate costs of employee injury
to be borne by fellow employees, whether negligent or
not. It would be a sad spectacle, indeed, for a workman
to find his home taken and his future earnings subjected
to payment of a judgment in such a suit." Madison, 156
Mont. at 213-15, 478 P.2d at 863-64.
Clearly, a central purpose of the workers' compensation system
is to place the cost of employee injuries on the enterprise or the
industry, and that purpose is accomplished, in part, by granting
immunity to coemployees whose negligence caused or contributed to
the injury. Under this system, an employee injured on the job is
compensated for his injuries by the employer's payment of workers'
compensation benefits. Those benefits cover not only the liability
of the employer, but also that of the employer's other employees
who negligently caused the injury in the course of their
employment. In other words, the liability of the coemployee is paid
by the employer in the form of workers' compensation benefits and
the coemployee is immune from suit. In this manner, the system
achieves the goal of placing the burden of employee injuries on the
employer.
Allowing contribution to be recovered from a coemployee would
entirely defeat the effect of the immunity granted to coemployees
and would thereby defeat a central purpose of the Workers'
Compensation Act. Contribution from a coemployee would allow the
cost of employee injuries to be placed on the coemployee. Moreover,
the coemployee could be forced to subsidize the employer's payment
of workers' compensation benefits. A third party sued by an injured
employee could choose to sue only the coemployee, and not the
employer, for contribution. Consequently, if a judgment was
rendered for the injured employee, and the coemployee was found
liable for contribution to that judgment, at least a part of the
employer's reimbursement of its workers' compensation lien will
have been paid by the coemployee. This result flies in the face of
the intent of the workers' compensation scheme. As the Minnesota
Supreme Court observed in addressing coemployee immunity under that
state's worker's compensation statute:
"To allow an employee to sue his fellow worker for
negligence and thus permit his employer to be reimbursed
from the recovery for workers' compensation benefits
already paid is ``to shift tort liability from employer to
fellow employee in a manner never intended by the
workers' compensation system.' " Peterson v. Kludt, 317
N.W.2d 43, 48 (Minn. 1982), quoting Minnesota Workers'
Compensation Study Commission, A Report to the Minnesota
Legislature and Governor 41 (1979).
Considering the important role coemployee immunity plays in
our workers' compensation scheme, and the fact that contribution
from the coemployee would defeat that immunity, we must conclude
that the immunity prevails over the right to contribution.
Accordingly, we hold that where coemployee immunity under the
Workers' Compensation Act would bar a direct suit against the
coemployee, it will also bar a third-party contribution action
against the coemployee.
This holding is entirely consistent with Kotecki. In Kotecki,
we allowed contribution to be obtained from the employer, but only
up to the amount of the employer's liability under the Workers'
Compensation Act. In this manner, the employer's interest in
limiting its liability to workers' compensation benefits was
substantially preserved. Contribution was allowed only to the
extent that it did not impair this important facet of the workers'
compensation system. We have found here that allowing contribution
to be recovered from an otherwise immune coemployee would defeat a
basic purpose of the workers' compensation system. Thus, in keeping
with Kotecki, the right to contribution must fall.
Further, we note that a third party sued by an injured
employee is not, as a result of this holding, entirely without
recourse when the negligence of the plaintiff's coemployee caused
or contributed to the plaintiff's injury. Under Kotecki, the third
party may still recover contribution, albeit in a limited amount,
from the employer. In many cases, the basis for imposing
contribution liability on the employer will be the negligence of a
coemployee. By pursuing a contribution action against the employer,
the third party is thereby able to recover some contribution
premised on the coemployee's negligence. In essence, the
contribution allowed to be recovered from the employer under
Kotecki constitutes the maximum contribution a third party may
obtain for the negligence of either the employer or a coemployee
acting in the course of his or her employment. In keeping with the
intent of the Workers' Compensation Act, however, that liability
must be paid by the employer, not by the coemployee.
In sum, we hold that the immunity granted to coemployees under
section 5(a) of the Workers' Compensation Act (820 ILCS 305/5(a)
(West 1992)) may be raised as a bar in both direct actions and
third-party contribution actions. In this case, there is no dispute
that the coemployee, Ricky Baker, would be immune from a direct
negligence suit by the plaintiff under section 5(a). Morrison's
third-party claim for contribution against Ricky Baker is therefore
also barred by section 5(a). The circuit court properly dismissed
Morrison's third-party action against Ricky Baker on this basis.
II
We next address whether the trial court abused its discretion
in granting employer Tony Baker's post-trial motion. As noted,
Morrison's pretrial motion for leave to file his third-party action
against the employer was granted, and the employer's pretrial
motion to dismiss that action was denied. A different judge
presided at trial and post-trial proceedings than had presided over
pretrial matters. That judge granted the employer's post-trial
motion and dismissed the third-party action against the employer.
The trial judge determined that the employer was prejudiced because
several depositions were taken before he was joined in the action.
We agree with the appellate court that the post-trial order
dismissing Morrison's third-party action against the employer was
an abuse of discretion.
The employer does not contend that Morrison's third-party
action was filed outside the applicable statute of limitations. The
employer nonetheless challenges the timeliness of the third-party
action. Morrison's third-party action sought contribution from the
employer under the Joint Tortfeasor Contribution Act (740 ILCS
100/0.01 et seq. (West 1992)). Section 5 of the Contribution Act
states that an action for contribution may be asserted by a
separate action before or after payment, by counterclaim or by
third-party complaint in a pending action. 740 ILCS 100/5 (West
1992). In Laue v. Leifheit, 105 Ill. 2d 191 (1984), this court
interpreted section 5 to require that, where an underlying action
has been filed, a third-party contribution action must be filed
during the pendency of the underlying action or it is barred.
Morrison's amended third-party complaint was filed during the
pendency of the underlying action, and was thus timely under Laue.
Even where a third-party contribution action is filed during the
pendency of the underlying action, however, it may still be
considered untimely where there was such a delay in filing that the
third-party defendant would be prejudiced if the complaint were
allowed to stand. See Grimming v. Alton & Southern Ry. Co., 204
Ill. App. 3d 961, 977-78 (1990); Long v. Friesland, 178 Ill. App.
3d 42, 59-60 (1988). The record in this case shows that the
employer was not prejudiced by the timing of Morrison's third-party
action.
A review of the procedural history of this case is necessary
for resolution of this issue. The plaintiff filed his action
against Morrison on September 20, 1991. Morrison answered the
complaint on October 28, 1991. In answers to interrogatories filed
on March 23, 1992, the plaintiff stated that he was employed at
"Baker's Auto Repair." On May 15, 1992, Morrison sought leave to
file a third-party complaint for contribution against Ricky Baker,
charging that Ricky Baker's negligence caused the accident. This
third-party complaint alleged that, at the time of the collision,
the plaintiff was an employee of "Ricky W. Baker, d/b/a Baker's
Auto Repair." Leave to file this third-party complaint was granted
by the circuit court on June 1, 1992, and the complaint was filed
on that date. Accordingly, as of this time, it was apparent that
Morrison was acting under the impression that Ricky Baker was the
plaintiff's employer.
In August 1992, however, the plaintiff filed answers to
interrogatories propounded by Ricky Baker in which the plaintiff
listed "Tony Baker d/b/a Baker's Auto Repair" as his employer at
the time of the collision. On September 15, 1992, Morrison moved
for leave to file an amended third-party complaint, adding Tony
Baker, the employer, as a third-party defendant. The depositions of
the plaintiff, Morrison and Ricky Baker, previously scheduled and
continued on several occasions, were taken on September 23, 1992.
The trial judge entered an order on September 26, 1992, granting
Morrison's motion for leave to file the amended third-party
complaint and Morrison's amended third-party complaint was filed
that same date. Count I again charged Ricky Baker, the plaintiff's
coemployee, with negligently causing the collision, but added that
Ricky Baker was acting as the employee/agent of Tony Baker at the
time of the accident. Count II charged Tony Baker, d/b/a Baker's
Auto Repair, with vicarious liability for the negligent acts of his
employee/agent, Ricky Baker.
Morrison's amended third-party complaint was not served on the
employer, Tony Baker, until February 29, 1993. Prior to the time
the employer was served, the depositions of the deputy sheriff who
investigated the accident and a treating doctor were taken. Upon
being served, the employer did not immediately move to dismiss the
complaint but, rather, answered the complaint on March 26, 1993. It
was not until two months after he was served that the employer
filed a motion to dismiss challenging the timeliness of the amended
third-party complaint. The employer's motion charged that the
amended third-party complaint was not timely filed, and that the
delay had prejudiced him because he did not have adequate time to
prepare for trial. Alternatively, the motion asked the court to
continue the trial date so as to allow the employer "sufficient
time to conduct discovery and prepare for trial." The trial court
entered an order on May 7, 1993, denying the motion to dismiss, but
continuing the trial date to September 20, 1993, and extending
discovery to September 1, 1993. The trial eventually began on April
4, 1994, 13 months after the employer was served. The employer,
represented by counsel, participated fully in the trial.
These facts demonstrate that the employer's motion to dismiss
the amended third-party complaint was properly denied, and the
post-trial order reversing that ruling was an abuse of discretion.
The employer's motion to dismiss was clearly concerned with the
impending trial date and the lack of time to conduct discovery and
prepare for trial. The trial judge alleviated this concern by
continuing both the trial date and the time for conducting
discovery. Ultimately, the trial did not take place until 13 months
after the employer was served. The employer thus had ample time to
conduct discovery and prepare for trial. This is particularly true
here, where the employer's alleged liability was premised solely on
vicarious responsibility for another, Ricky Baker, a party to the
action who also happens to be the employer's son.
The employer's argument that he was prejudiced because several
depositions were taken before he was served must be rejected. The
employer had 13 months within which he could have sought to take
the depositions of those deponents, if he chose. The employer took
no such action. Thus, the record reveals no prejudice to the
employer sufficient to warrant dismissal of the third-party
contribution claim.
The employer also asserts that, even if he was not prejudiced,
dismissal was warranted because Morrison failed to offer a
reasonable explanation for failing to file the third-party action
against the employer earlier. We disagree. Section 2--406(b) of the
Code of Civil Procedure provides that a defendant may file a third-
party action "[w]ithin the time for filing his or her answer or
thereafter by leave of court." 735 ILCS 5/2--406(b) (West 1992).
This court has stated that third-party actions are favored and
trial courts should be liberal in granting leave to file them.
People v. Brockman, 143 Ill. 2d 351, 365 (1991). The third-party
plaintiff's explanation for failing to file a third-party action
earlier is simply one factor to be considered in assessing whether
prejudice to the third-party defendant outweighs the right to file
an otherwise timely action. Where there is clearly no prejudice to
the third-party defendant, dismissal of the third-party action is
not appropriate simply because the third-party plaintiff failed to
provide an explanation for not filing earlier. In any event, the
record in this case amply demonstrates that Morrison had a
reasonable explanation for failing to file a third-party action
against the employer earlier. The record reveals that, prior to the
filing of the amended third-party complaint, Morrison was acting
under the misconception that Ricky Baker, not Tony Baker, was the
plaintiff's employer.
The cases cited by the employer are easily distinguishable. In
both Grimming v. Alton & Southern Ry. Co., 204 Ill. App. 3d 961
(1990), and Long v. Friesland, 178 Ill. App. 3d 42 (1988), the
contribution actions were filed either days before, or during,
trial, and the third-party defendants were thus clearly prejudiced
by the late filing. No comparable facts are present here. Rather,
the employer here was served with the amended third-party complaint
13 months prior to trial and was in no manner prevented from
preparing for, or participating in, the trial. We therefore hold
that the circuit court's post-trial order granting the employer's
motion to dismiss Morrison's third-party action was an abuse of
discretion. Accordingly, we reverse the circuit court's order
dismissing Morrison's third-party complaint against the employer,
and reinstate the third-party complaint against the employer and
the jury's verdict on that complaint.
III
Having reinstated the jury verdict on Morrison's third-party
complaint against the employer, we must next consider the amount of
contribution which Morrison is entitled to recover from the
employer.
This court first considered the amount of contribution that a
third party sued by an injured employee could obtain from the
plaintiff's employer in Kotecki v. Cyclops Welding Corp., 146 Ill.
2d 155 (1991). There, we adopted the "Minnesota rule," which holds
that an employer may be liable for contribution, but the amount of
the employer's contribution is limited to the amount of its
workers' compensation liability. Accordingly, under Kotecki, the
employer here may be liable in contribution to Morrison for no more
than the amount of his workers' compensation liability. The dispute
here centers on how that amount is to be calculated with regard to
the attorney fees and costs provision of section 5(b) of the
Workers' Compensation Act. 820 ILCS 305/5(b) (West 1992).
Section 5(b) of the Workers' Compensation Act requires an
employee who has received workers' compensation benefits to
reimburse the employer for those benefits from any recovery the
employee receives from a third party liable for the employee's
injuries. Wilson v. The Hoffman Group, Inc., 131 Ill. 2d 308, 311
(1989). This provision grants the employer a statutory lien on any
recovery the employee obtains from a third party, equal to the
amount of the workers' compensation benefits paid or owed. Kotecki,
146 Ill. 2d at 165; Corley v. James McHugh Construction Co., 266
Ill. App. 3d 618, 621 (1994). Section 5(b) further provides as
follows:
"Out of any reimbursement received by the employer
pursuant to this Section, the employer shall pay his pro
rata share of all costs and reasonably necessary expenses
in connection with such third-party claim, action or suit
and where the services of an attorney at law of the
employee or dependents have resulted in or substantially
contributed to the procurement *** of the proceeds out of
which the employer is reimbursed, then, in the absence of
other agreement, the employer shall pay such attorney 25%
of the gross amount of such reimbursement." (Emphasis
added.) 820 ILCS 305/5(b) (West 1992).
This provision requires an employer to pay, out of any
reimbursement received from the employee, its pro rata share of the
employee's costs and expenses and, unless otherwise agreed, 25% of
the gross amount of the reimbursement as fees to the employee's
attorney, if the attorney's services substantially contributed to
the reimbursement. " ``The plain purpose of this provision *** [is]
to require an employer to contribute to the necessary costs of the
employee's recovery against a negligent third party where the
employer is to receive reimbursement from the recovery for
workmen's compensation payments made or to be made to the
employee.' " In re Estate of Callahan, 144 Ill. 2d 32, 46 (1991),
quoting Reno v. Maryland Casualty Co., 27 Ill. 2d 245, 247 (1962).
The employer argues that, pursuant to Kotecki, he may not be
required to pay both contribution to Morrison in an amount equal to
the workers' compensation benefits paid, and section 5(b) attorney
fees to the plaintiff or his attorney. The employer notes that, if
he is required to pay both, his reimbursement from the plaintiff
will be reduced by 25% for attorney fees and he will obtain a
reimbursement of only 75% of the workers' compensation benefits
paid. However, he will also be required to pay an amount equal to
100% of the benefits in contribution to Morrison. Thus, he asserts,
he will ultimately be paying an amount equal to 125% of his
workers' compensation liability, in violation of Kotecki. The
trial court agreed with the employer and held, in effect, that the
amount of contribution owed by the employer should be limited to
75% of the workers' compensation benefits.
We agree with the appellate court that the trial court erred
in limiting Morrison's contribution judgment to 75% of the workers'
compensation benefits paid. We hold that the employer's liability
for contribution should be limited only by the amount of workers'
compensation benefits paid, with no reduction for the employer's
section 5(b) share of attorney fees and costs. In Kotecki, we
determined that an employer's contribution liability is limited to
the amount of the employer's "workers' compensation liability."
Kotecki, 146 Ill. 2d at 164-65. The employer's "workers'
compensation liability" clearly denotes the amount of benefits the
employer owes under the Workers' Compensation Act, not the amount
of reimbursement the employer is entitled to recover from the
employee. The fact that the employer may also have to pay section
5(b) attorney fees and costs is irrelevant to the determination of
the employer's workers' compensation liability, and is therefore
irrelevant to the determination of the employer's contribution
liability.
This is the only conclusion that is consistent with the
language of section 5(b). Reducing the amount of contribution
recoverable by the third party to reflect section 5(b) fees would,
in effect, shift the obligation to pay attorney fees under section
5(b) from the employer to the third party. The attorney fees and
costs provision of section 5(b) is an obligation imposed on the
employer, however. There is no basis in section 5(b) for shifting
this obligation to the third party. See Thies v. Korte-Plocher
Construction Co., 268 Ill. App. 3d 217, 219-22 (1994); Corley v.
James McHugh Construction Co., 266 Ill. App. 3d 618, 622-25 (1994).
Moreover, the rationale for imposing this obligation on the
employer is that the employer receives a benefit as a result of the
employee's having prosecuted the third-party action, namely,
reimbursement. The third party, on the other hand, clearly receives
no benefit as a result of having been sued by the employee.
The Minnesota Supreme Court has reached this same conclusion
with regard to a provision in the Minnesota workers' compensation
statute which reduced the employer's reimbursement from the
employee's recovery by a portion of the employee's attorney fees in
pursuing suit against the third party. Kordosky v. Conway Fire &
Safety, Inc., 304 N.W.2d 616 (Minn. 1981). As noted, in Kotecki
this court adopted the "Minnesota rule" espoused in Lambertson v.
Cincinnati Corp., 312 Minn. 114, 257 N.W.2d 679 (1977). Kotecki,
146 Ill. 2d at 164. We therefore deem it appropriate to examine how
the Minnesota Supreme Court has resolved this issue.
In Kordosky v. Conway Fire & Safety, Inc., 304 N.W.2d 616
(Minn. 1981), the Minnesota Supreme Court considered whether, under
Lambertson, the employer's liability for contribution was the full
amount of workers' compensation benefits, or should be reduced in
the same manner as the employer's reimbursement from the employee
would be reduced for attorney fees. The Kordosky court rejected the
argument that the employer's contribution liability should be
reduced to only that amount which the employer will obtain in
reimbursement from the employee. The court reasoned:
"In Lambertson, this court attempted to balance the
interests of the employee, employer and third party. As
the court noted, ``the third party's interest is that of
any other cotortfeasor--to limit its liability to no more
than its established fault.' [Citation.] In order to
vindicate this interest, the court allowed the third
party to obtain contribution from the employer up to the
amount of the employer's workers' compensation liability.
[Citation.] If the court adopted [this] solution, the
contribution that the third party is able to obtain from
the employer, already severely limited in many cases,
will be further reduced. Moreover, since the reduction
mandated [by the workers' compensation statute] reflects
attorneys fees expended by the employee to obtain the
recovery from the third party, to pass this reduction on
to the third party would be to require the third party to
pay for the privilege of being sued. This is not
consistent with the equitable principles that form the
basis of the Lambertson holding." Kordosky, 304 N.W.2d at
621.
We agree with the Minnesota Supreme Court that the third party
should not be required to "pay for the privilege of being sued."
The trial court therefore erred in reducing the employer's
contribution liability to 75% of the workers' compensation benefits
paid.
We note that the employer also argues that, if he is required
to pay contribution to Morrison in an amount equal to 100% of the
workers' compensation benefits, he should not be required to pay
section 5(b) attorney fees and costs. The employer would thus
deprive the plaintiff and his attorney of section 5(b) fees and
costs in this case.
We do not address whether the employer may avoid his section
5(b) obligation to pay fees and costs to the plaintiff in this
case. The issue we are called upon to decide is the amount of
contribution that Morrison is entitled to recover from the
employer. We have held that Morrison is entitled to recover
contribution in an amount equal to 100% of the workers'
compensation benefits paid, and that whether the employer must pay
section 5(b) fees to the plaintiff is irrelevant to this
determination. The employer's argument that he should not be
required to pay section 5(b) fees in this case would impact the
recovery of the plaintiff and his attorney. The plaintiff is not a
party to this appeal, and issues regarding the employer's
obligations to the plaintiff or his attorney are not before us. We
decline to address this issue without the benefit of argument on
the plaintiff's behalf. We therefore hold only that Morrison is
entitled to recover contribution from the employer in an amount
equal to 100% of the workers' compensation benefits paid,
regardless of the employer's obligation to pay fees and costs under
section 5(b). To the extent that the appellate court's judgment may
have addressed the issue of whether the employer must pay section
5(b) fees to the plaintiff or his attorney, that holding is
vacated.
Accordingly, we reverse the circuit court's ruling that the
employer's contribution liability to Morrison is limited to 75% of
the workers' compensation benefits paid. On remand, the circuit
court is directed to enter an order holding the employer liable for
contribution to Morrison in the full amount of workers'
compensation benefits paid by the employer.
CONCLUSION
For the reasons stated, we affirm in part and reverse in part
the appellate court's judgment. We reverse the appellate court's
holding reversing the circuit court's dismissal of Morrison's
third-party action against Ricky Baker. We affirm the appellate
court's holding reversing the circuit court's dismissal of
Morrison's third-party action against Tony Baker. We also affirm
the appellate court's holding reversing the circuit court's order
limiting Tony Baker's contribution liability to 75% of workers'
compensation benefits paid. To the extent that the appellate
court's judgment addressed the issue of whether the employer must
pay section 5(b) fees to the plaintiff or his attorney, that
holding is vacated. This cause is remanded to the circuit court for
further proceedings consistent with this opinion.
Appellate court affirmed in part
and reversed in part;
circuit court affirmed in part
and reversed in part;
cause remanded.
JUSTICE HARRISON, concurring in part and dissenting in part:
I agree that we should affirm the appellate court's holding
reversing the circuit court's dismissal of Morrison's third-party
action against Tony Baker. I also agree that we should affirm the
appellate court's holding reversing the circuit court's order
limiting Tony Baker's contribution liability to 75% of workers'
compensation benefits paid. What I cannot agree with is my
colleagues' determination that the circuit court was correct in
dismissing Morrison's third-party action against Ricky Baker.
In Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155 (1991),
this court reaffirmed the proposition stated in Doyle v. Rhodes,
101 Ill. 2d 1 (1984), that the Workers' Compensation Act (820 ILCS
305/1 et seq. (West 1992)) did not bar third-party actions for
contribution under the Contribution Act (740 ILCS 100/0.01 et seq.
(West 1992)). Although Doyle and Kotecki both dealt with
contribution actions against an employer, there is nothing in the
reasoning of those cases that would justify a different result when
the contribution action is brought against a coemployee. The
statutory provisions involved are precisely the same.
In ruling as it does, the majority asserts that third-party
actions against coemployees should be prohibited because allowing
compensation to be recovered from an otherwise immune coemployee
would defeat a basic purpose of the workers' compensation system.
My colleagues forget, however, that this is merely one side of the
equation. The other side is that granting immunity to a coemployee
under the Workers' Compensation Act defeats a basic purpose of the
Contribution Act. Indeed, it renders the Contribution Act
meaningless.
This court has long recognized the tension between the two
laws, but the solution the majority fashions today is wholly
improper. Rather than trying to give effect to both statutes, as it
should, the majority simply decides that where the Workers'
Compensation and Contribution Acts conflict, the Workers'
Compensation Act will prevail. There is no basis in the law for
this view. To the contrary, as Justice Freeman noted in his
dissenting opinion on denial of rehearing in Kotecki, settled rules
of statutory construction yield the conclusion that the Workers'
Compensation Act must give way to the later-enacted and more
specific Contribution Act. Kotecki, 146 Ill. 2d at 168, 173
(Freeman, J., dissenting from denial of rehearing).
For the foregoing reasons, I would affirm the judgment of the
appellate court in full.
Document Info
Docket Number： 80303
Filed Date： 2/6/1997
Precedential Status： Precedential
Modified Date： 10/22/2015