Gadson v. Among Friends Adult Day Care, Inc. , 2015 IL App (1st) 141967 ( 2015 )

2015 IL App (1st) 141967
FOURTH DIVISION
August 13, 2015
No. 1-14-1967
ROBERT GADSON, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County
)
v. ) No. 13 L 1840
)
AMONG FRIENDS ADULT DAY CARE, INC., ) Honorable
JOHN G. KLIMEK and NICOLE M. PETERS, ) John H. Ehrlich,
) Judge Presiding.
Defendants-Appellees. )
JUSTICE ELLIS delivered the judgment of the court, with opinion.
Presiding Justice Fitzgerald Smith and Justice Howse concurred in the judgment and
opinion.
OPINION
¶1 Plaintiff Robert Gadson was involved in an automobile accident in which he allegedly
sustained both damage to his car and personal injury. He was compensated by his automobile
insurance company for the damage to his car (minus a deductible). So the insurance company
filed a subrogation claim against defendants for the property damage to the car. The insurance
company did not file that lawsuit in its own name, but rather in the name of its insured, plaintiff.
Plaintiff later filed a separate lawsuit of his own against defendants, alleging personal injury.
Defendants moved to dismiss the personal-injury lawsuit as barred by res judicata, in light of the
earlier property-damage lawsuit in the name of plaintiff against the same defendants, which by
that point had been resolved by settlement. The trial court agreed with defendants and dismissed
the personal-injury suit. We must determine whether the trial court properly interpreted section
2-403 of the Code of Civil Procedure (735 ILCS 5/2-403 (West 2010)) in dismissing this action
No. 1-14-1967
based on res judicata. We hold that it did not. We reverse the trial court’s dismissal and remand
for further proceedings.
¶2 I. BACKGROUND
¶3 After a March 18, 2011 auto accident, plaintiff's automobile insurer, American Access
Insurance Company (American Access), compensated plaintiff for his automobile damage,
minus a $500 deductible plaintiff paid. On August 31, 2011, American Access retained a lawyer,
Ronald J. Scaletta, and filed a subrogation action against defendants, Among Friends Adult Day
Care, Inc. (Among Friends) and Nicole M. Peters, in the municipal division of the circuit court of
Cook County (docket no. 12 M1 015955). The lawsuit sought $7,287.85 for property damage to
plaintiff's vehicle. The action was styled, "Robert Gadson v. Among Friends Adult Day Care,
Inc., John G. Klimek & Nicole M. Peters." The complaint did not mention American Access or
the fact that the action was brought in subrogation. 1
¶4 On February 20, 2013, while the subrogation case was still pending, plaintiff, through a
different attorney, filed this action in the law division of the circuit court of Cook County (docket
no. 13 L 1840), naming the same defendants and based on the same car accident, but in this case
seeking damages for personal injuries only.
¶5 On April 23, 2013, after arbitration, the parties reached a settlement in the subrogation
action and dismissed it. The record contains a copy of a release of claims against defendant
Peters and her auto insurer that purports to be signed by plaintiff and Scaletta, in consideration of
payment of $2,089.47. (As we will see, plaintiff denies ever signing that release.) The release
discharged Peters from any further present or future claims of property damage arising from the
1
According to the record, the third named defendant, John G. Klimek, was Among
Friends' agent and the driver of its vehicle, but he is not a party to this appeal.
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No. 1-14-1967
March 18 car accident. (We are not aware of any release executed between plaintiff and the other
defendant, Among Friends, and none has been called to our attention.)
¶6 The record also contains copies of two settlement checks, one from each defendant's
insurance company. The first check is for $2,089.47 from Peters' auto insurer, made payable to
"Law Offices of Ronald J. Scaletta & American Access." The second check, from defendant
Among Friends' auto insurer in the amount of $3,134.19, was made payable to "Ameican [sic]
Access A.S.O. Robert Gadson and its attorneys Ronald J. Scalleta [sic] Law Offices." The parties
acknowledge that "A.S.O." is shorthand for "as subrogee of."
¶7 After the subrogation action was dismissed with prejudice, both defendants filed motions
to dismiss the personal-injury action that is the subject of this appeal. Defendant Among Friends,
moving for dismissal under sections 2-619(a)(4) and (a)(9) (735 ILCS 5/2-619(a)(4),(a)(9) (West
2010)), argued that this action was barred by res judicata, in light of the previous property-
damage lawsuit arising from the same car accident and involving the same plaintiff and
defendants. Defendant Peters additionally argued that the personal-injury action was barred by
the release of claims plaintiff signed in the property-damage claim, pursuant to section 2-
619(a)(6) (permitting dismissal where "claim set forth in the plaintiff's pleading has been
released, satisfied of record, or discharged in bankruptcy"). 735 ILCS 5/2-619(a)(6) (West 2010).
¶8 The dispute concerning res judicata revolved around section 2-403 of the Code of Civil
Procedure (735 ILCS 5/2-403(d) (West 2010), a section of the Code that in part governs how
subrogation claims must be brought and which provides an exception to res judicata in the
subrogation context. Plaintiff claimed that subsection (d) of section 2-403 provided him that
exception to res judicata. Defendants argued that plaintiff did not follow the dictates of
subsection (c) in filing the subrogation claim, and thus plaintiff could not escape res judicata by
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No. 1-14-1967
relying on the exception to that doctrine contained in subsection (d). With regard to the
additional argument of release raised only by defendant Peters, plaintiff filed an affidavit saying
that the signature on the release purporting to be his was not—he swore he never signed that
release.
¶9 The trial court entered a written order dismissing the action based on Section 2-619 of the
Code, without specifying which subsection was the basis for its ruling and without otherwise
clarifying the grounds for dismissal. We have no transcript of any oral argument or ruling from
the bench, and the parties cite to none.
¶ 10 Plaintiff moved for reconsideration. In his motion, plaintiff once again swore that he did
not sign the release of all claims relied upon by defendant Peters for dismissal. Regarding res
judicata, his motion included an affidavit from the attorney in the subrogation case, Mr. Scaletta,
who swore that the defense attorneys in the subrogation case knew that it was a claim brought in
subrogation. In further support of his sworn contention, Mr. Scaletta noted that the checks were
written out to the insurance company, American Access (one of which was written to American
Access "as subrogee of" plaintiff). He also noted that the estimate of repairs tendered to
defendants showed a deductible of $500 paid by plaintiff. From all of this, plaintiff argued,
defendants obviously knew that the property-damage lawsuit was a claim brought in subrogation,
even if plaintiff did not properly follow the dictates of subsection (c) of section 2-403.
¶ 11 Unlike the hearing on the motion to dismiss, we do have a transcript from the motion for
reconsideration. The trial court ruled that, even if the affidavit of Mr. Scaletta were taken as true
and defendants did, in fact, affirmatively know that the first lawsuit was a subrogation claim, it
would not affect his ruling. The trial court said it did not matter whether defendants knew that
the property-damage action was one in subrogation; the statute, section 2-403(c), required that
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No. 1-14-1967
the insurance company bring the lawsuit in its own name and attach a verification explaining that
the insurance company had become subrogated to plaintiff due to the reimbursement of
plaintiff’s property loss. American Access did none of that—the complaint was filed in
plaintiff’s name, and no verification was attached—and thus the initial action could not be
considered a “subrogation” claim under subsection (c). As such, plaintiff could not rely on the
exception to res judicata for “subrogation” claims in subsection (d).
¶ 12 This appeal followed.
¶ 13 II. ANALYSIS
¶ 14 A section 2-619 motion to dismiss provides a means of obtaining a summary disposition
when a plaintiff's claim can be defeated as a matter of law or on the basis of easily proven issues
of fact. Zurich Insurance Co. v. Amcast Industrial Corp., 318 Ill. App. 3d 330, 333 (2000). A
section 2-619 motion to dismiss admits all well-pleaded facts in the complaint, and all
documents submitted in support of the motion must be considered in a light most favorable to the
nonmoving party. Id. In reviewing the trial court's dismissal of an action based on section 2-619,
we consider (1) whether a genuine issue of material fact exists and, if not, (2) whether the
defendant is entitled to a judgment as a matter of law. Id.
¶ 15 The trial court's ruling on a section 2-619 motion presents a question of law, which we
review de novo. DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006). Similarly, we review de novo the
construction of a statute, also a question of law. Id. We may affirm the judgment of the circuit
court on any basis appearing in the record, even if it was not the grounds on which the circuit
court relied, and even if the trial court’s basis for dismissal was incorrect. Rodriguez v. Sheriff's
Merit Comm'n of Kane County, 218 Ill. 2d 342, 357 (2006).
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No. 1-14-1967
¶ 16 The doctrine of res judicata provides that a final judgment on the merits, rendered by a
court of competent jurisdiction, bars any later actions between the same parties (or their privies)
on the same cause of action. Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 334 (1996). The bar
extends both to issues actually decided in the original action and to those which could have been
decided. Id. at 334-35. A defendant invoking the defense of res judicata must show: (1) a final
judgment on the merits by a court of competent jurisdiction; (2) an identity of causes of action;
and (3) an identity of the parties or their privies. Id. at 335. A “cause of action” is defined as the
set of facts giving the plaintiff the right to relief. Id. at 338.
¶ 17 Thus, where a plaintiff and a defendant are involved in a car accident, and the plaintiff
sues the defendant for property damage to his car, resulting in a final judgment, the plaintiff is
barred from later filing a second lawsuit, against the same defendant, arising from the same car
collision, seeking damages for personal injuries. Mason v. Parker, 295 Ill. App. 3d 1096, 1097-
99 (1998). Generally speaking, Illinois law does not allow such claim-splitting. As explained in
Mason, to allow a plaintiff to chop his claims up in such a fashion "leav[es] the courtroom doors
open to a possibility of never-ending legal battles between the same parties based upon the same
set of facts. Litigation should have an end. No person should be harassed with a multiplicity of
lawsuits arising out of one cause of action." Id. at 1098-99.
¶ 18 But the legislature recognized an exception to the res judicata doctrine in the context of
subrogation claims. See 735 ILCS 5/2-403(d) (West 2010). It is not difficult to see why. If an
insurance company makes its insured whole (or close to whole) for property damage the insured
suffered, the insurance company has the right to recover that reimbursement from the party
responsible for the damage in the first place. It does so through subrogation—it steps into the
shoes of the insured and pursues the property-damage claim against the tortfeasor. But suppose
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No. 1-14-1967
that, out of that same occurrence that produced the property damage, the insured also suffered
personal injuries. The insured has not been compensated by the insurance company for those
injuries, and he or she should have the right to pursue any claims for personal injury against the
tortfeasor, independently of whether the insurance company is seeking recovery for property
damage from that same defendant in a different lawsuit. After all, the insured typically has no
control over whether the insurance company files its own lawsuit for property damage; the
insured may not even know it did so. Thus, the General Assembly long ago determined that, in
the subrogation context, the benefits of res judicata “were outweighed by the potential harm that
could be suffered by [the insured-subrogor] who did not know of the prior action brought by the
[insurer-subrogee] or did not have any control over the prior action if he did know." Landrum v.
Time D.C., Inc., 85 Ill. App. 3d 985, 991 (1980).
¶ 19 We have cited with approval the reasoning of a Florida court that provided this additional
reason for exempting subrogation claims from the res judicata bar:
" 'The policy reason behind this insurance subrogation exception is to
facilitate the prompt settlement of property damage claims by an insured as
against his own insurance carrier without prejudicing either the insured's right to
sue the tortfeasor for personal injuries or the insurance carrier's right to bring a
subrogated property claim against the same tortfeasor. A contrary rule would
discourage such settlements by requiring the plaintiff insured to bring all of his
claims together in a single lawsuit and not settle his property damage claim with
his own carrier as soon as possible.' " Zurich Insurance Co. v. Amcast Industrial
Corp., 318 Ill. App. 3d 330, 337 (2000) (quoting McKibben v. Zamora, 358 So.
2d 866, 868 (Fla. Dist. Ct. App. 1978)).
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¶ 20 Indeed, as we also noted in Zurich, courts in other jurisdictions have found the need to
exempt subrogation claims from the res judicata doctrine to be so compelling that they imposed
the exception by judicial fiat in the absence of a state statute. Id. at 336 (collecting cases).
¶ 21 The statutory exemption to res judicata for subrogation claims, subsection (d) of section
2-403, reads as follows:
“(d) A judgment in an action brought and conducted by a subrogee [i.e., the
insurer] by virtue of the subrogation provision of any contract or by virtue of any
subrogation by operation of law, whether in the name of the subrogor [i.e., the insured] or
otherwise, is not a bar or a determination on the merits of the case or any aspect thereof
in an action by the subrogor to recover upon any other cause of action arising out of the
same transaction or series of transactions." 735 ILCS 5/2-403(d) (West 2010).
¶ 22 "There is no question that section 2-403(d) is designed to protect an insured from having
a claim for personal injury barred by res judicata because his subrogated insurance carrier has
previously litigated the issue of property damage arising out of the same accident." Zurich, 318
Ill. App. 3d at 335-36; accord Landrum, 85 Ill. App. 3d at 990 (construing predecessor statute as
"a statutory exception to the basic rules of res judicata").
¶ 23 Defendants do not dispute as much; each of them at least generally recognizes section 2-
403(d) as providing an exception to the application of res judicata for subrogation claims. They
claim, however, that the property-damage action filed in the name of plaintiff by American
Access’s lawyer was not a subrogation claim, at least not for the purposes of section 2-403. They
argue that plaintiff cannot fall under the protection of section 2-403(d) because the initial
property-damage lawsuit failed to comply with subsection (c) of that statute:
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“(c) Any action hereafter brought by virtue of the subrogation provision of
any contract or by virtue of subrogation by operation of law shall be brought
either in the name or for the use of the subrogee [i.e., the insurer]; and the
subrogee shall in his or her pleading on oath, or by his or her affidavit if pleading
is not required, allege that he or she is the actual bona fide subrogee and set forth
how and when he or she became subrogee.” 735 ILCS 5/2-403(c) (West 2010).
¶ 24 It is undisputed here that the property-damage lawsuit at issue was filed in the name of
plaintiff, who was the subrogor, not the subrogee. It is likewise undisputed that the complaint
neither pleaded nor incorporated by affidavit that American Access was “the actual bona fide
subrogee,” nor did the complaint “set forth how and when [American Access] became
subrogee.” Id. Thus, defendant Among Friends argues, because the property-damage lawsuit
“was not styled as a subrogation action, *** the exception [to res judicata] does not apply.” As
defendant Peters puts it, the initial property-damage lawsuit “was not a subrogation action
because it did not comply with” subsection (c) and thus “was not ‘saved’ by” subsection (d).
¶ 25 At first blush, it might appear that the textual argument defendants raise has some merit,
because subsection (c) does require that “any” action brought in subrogation “shall be brought
either in the name or for the use of” the insurer-subrogee. Id. The word “any” covers the
universe, and “shall” is often given a mandatory construction. But the problem with this
interpretation is that "[a] long line of cases has established the principle that if an insured
plaintiff has even a de minimus pecuniary interest in the suit, that interest is sufficient to allow a
subrogation action to be maintained in the plaintiff's name." Radtke v. International Heater Co.,
140 Ill. App. 3d 542, 544 (1986); see also Orejel v. York International Corp., 287 Ill. App. 3d
592, 604 (1997); Brooke Inns, Inc. v. S&R Hi-Fi & TV, 249 Ill. App. 3d 1064, 1078-79 (1993);
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Scheibel v. Groeteka, 183 Ill. App. 3d 120, 145 (1989); Nitrin, Inc. v. Bethlehem Steel Corp., 35
Ill. App. 3d 577, 592 (1976); In re Estate of Mallerdino, 20 Ill. App. 3d 331, 336-37 (1974).
Neither defendant acknowledges the principle established in this long line of cases, nor did the
trial court address it.
¶ 26 Here, it is undisputed that plaintiff retained a $500 deductible interest in the outcome of
the subrogation lawsuit. Thus, even if his interest was minor compared to that of American
Access, he was still a real party-in-interest to the litigation. In accordance with the case law
above, it was entirely proper for American Access to name plaintiff, instead of itself, in the
subrogation suit; it was not a violation of section 2-403(c).
¶ 27 Defendants point to case law holding that "the interest of the subrogee cannot be
concealed in any proceeding brought for its benefit." But those cases reinforce our position.
Those cases only stand for the proposition that an action must be brought in the name of the
insurer-subrogee if that insurer-subrogee has compensated the insured for all the damages it
could seek against a defendant, and the insured thus no longer has any claim remaining. In Shaw
v. Close, 92 Ill. App. 2d 1, 4 (1968), for example, the insured had fully resolved its claims; “the
only action which remained was [that] of the insurance company.” Thus, because the insured was
the only remaining real party-in-interest, the “action had to be brought either in the name of or
for the use of the [insurance] company.” Id. Likewise, in Nitrin, Inc., 35 Ill. App. 3d at 592, the
court noted that the interest of the insurer-subrogee could not be concealed, but again, the
insurer-subrogee had already compensated the insured “for all damages it was seeking against
defendant,” and it was only because of that fact that the court held that the insurer-subrogee was
required to be disclosed as the real party in interest. In Orejel, 287 Ill. App. 3d at 605, we upheld
the trial court’s decision not to require the insurer-subrogee to be named as a plaintiff because
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No. 1-14-1967
the insured still had a remaining, if relatively small, pecuniary interest in the proceeding. Orejel
distinguished yet another case cited by defendants for their mistaken proposition, (Prudential
Insurance Co. v. Romanelli, 243 Ill. App. 3d 246, 250 (1993)), where “the court held that the
insurance company was the actual party in interest because, based upon the record, the plaintiff
no longer had any interest in the subrogated claim.” (Emphasis in original). Orejel, 287 Ill. App.
3d at 605.
¶ 28 It is clear from this discussion that, under section 2-403(c), where the insurer-subrogee is
the only remaining real party-in-interest to the subrogation action because the pecuniary interest
of the insured has been fully satisfied, the insurer-subrogee is required to file the action in its
own name. It may not conceal its status, and in addition must swear to the facts that entitle it to
its subrogated status. 735 ILCS 5/2-403(c) (West 2010). But where, as here, the insured retains
even a de minimus financial stake in the outcome of the subrogation proceeding, the subrogation
claim may be brought in the insured’s name, and the remaining affidavit/verification language in
subsection (c) is inapplicable.
¶ 29 If the foregoing was not clear enough, we also would point to the language of section 2-
403(d), language which defendants do not address despite plaintiff’s repeated references to it,
which provides that the exception to the res judicata doctrine applies to “[a] judgment in an
action brought and conducted by a subrogee ***, whether in the name of the subrogor or
otherwise.” (Emphasis added.) 735 ILCS 5/2-403(d) (West 2010). If, as defendants claim, a
subrogation claim can never be brought in the name of the insured-subrogor, this highlighted
language would be unnecessary, if not nonsensical. Clearly, the General Assembly contemplated
that some subrogation claims might be brought in the name of the insured-subrogor, and the
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legislature intended that subrogation claims brought in the name of the insured-subrogor would
receive the same res judicata exception as those brought in the name of the insurance company.
¶ 30 We thus find section 2-403(d)’s exception to the res judicata doctrine applicable here.
The property-damage lawsuit filed by American Access in plaintiff’s name was unquestionably a
subrogation claim that complied with section 2-403(c) and that fell within the exception in
section 2-403(d). Thus, plaintiff's personal-injury action was not barred by res judicata and
should have been allowed to proceed in the circuit court.
¶ 31 It appears that the trial court’s ruling to the contrary was the basis for its dismissal of the
complaint, and we find that ruling to be in error. But defendant Peters raises an additional
argument, and even if the trial court did not rely on it, we have already noted that we may affirm
on any basis in the record. Rodriguez, 218 Ill. 2d at 357. So we will consider that remaining
argument.
¶ 32 Defendant Peters brought her motion to dismiss based on section 2-619(a)(6), which
permits dismissal upon proof that plaintiff had signed a valid release of all claims in a matter. We
do not find the release to be a basis for dismissal here for two reasons. First, plaintiff responded
to the motion to dismiss with an affidavit stating that he never signed that release, and his
affidavit was unopposed. The unopposed affidavit would be enough, by itself, to create a
question of fact as to the validity of the release. See Doe v. University of Chicago Medical
Center, 2015 IL App (1st) 133735, ¶ 55 (plaintiff’s unopposed affidavit created question of fact
as to scope of defendant’s promises to her, precluding section 2-619 dismissal). Second, even if
the release were valid, it only discharged defendant with regard to any further present or future
property damage claims, and this lawsuit is a personal-injury action. The scope and extent of a
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release depends on the intent of the parties as expressed in the instrument. Shaw, 92 Ill. App. 2d
at 3. The release said nothing about personal-injury claims, and we will not read it as such.
¶ 33 The judgment of the circuit court of Cook County is reversed. We remand the cause for
further proceedings.
¶ 34 Reversed and remanded.
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