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Pritchett v. Asbestos Claims Management Corp.
State: Illinois
Court: 5th District Appellate
Docket No: 5-01-0095 Rel
Case Date: 07/26/2002

Notice

Decision filed 07/26/02. The text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.

NO. 5-01-0095

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT


 

LOUIS V. PRITCHETT, ) Appeal from the
) Circuit Court of
               Plaintiff-Appellee, ) Madison County.
)
v. ) No. 99-L-750
)
THE ASBESTOS CLAIMS MANAGEMENT )
CORPORATION, CERTAIN-TEED )
CORPORATION, and QUIGLEY COMPANY )
INC.,  )
)
              Defendants-Appellants, )
and )
)
ARMSTRONG WORLD INDUSTRIES, INC., )
GAF CORPORATION, and UNITED STATES )
GYPSUM COMPANY, ) Honorable
) Nicholas G. Byron,
              Defendants.  ) Judge, presiding.

 


JUSTICE MELISSA CHAPMAN delivered the opinion of the court:

This is an appeal from an order of the circuit court entering a judgment to enforce asettlement agreement. The issues for review are whether the court erred in enforcing thesettlement agreement against the defendants jointly and severally for an unpaid portion ofthe agreed amount of the settlement and whether the court erred in finding that the plaintiff'snegotiation of a check tendered by the defendants for less than the settlement amount did notconstitute an accord and satisfaction. We affirm.

I. FACTS

The Center for Claims Resolution (CCR) is a nonprofit corporation that was createdto provide for the administration, defense, payment, and disposition of asbestos-relatedclaims for its member corporations named as defendants in asbestos-related personal-injurylawsuits. The relationship among the members and the operation of CCR is governed by acontract, "Producer Agreement Concerning Center for Claims Resolution" (ProducerAgreement). Under the Producer Agreement each member designates CCR as its sole agentin administering and arranging the evaluation, settlement, payment, or defense of allasbestos-related claims. Accordingly, CCR members are prohibited from acting on theirown in response to any asbestos claims. Each member also authorizes CCR to calculate eachmember's share of each settlement in accordance with an established share matrix outlinedin the agreement. The Producer Agreement provides that only those that are parties to theagreement may challenge or enforce any such allocation determinations. Further, under theagreement, CCR handles each asbestos-related claim on behalf of all member corporationsand will not settle an asbestos-related claim on behalf of fewer than all of its membercorporations.

On June 27, 1999, the plaintiff, Louis V. Pritchett, brought suit against ArmstrongWorld Industries, Inc., The Asbestos Claims Management Corp., Certain-Teed Corp., GAFCorp. (GAF), Quigley Company, and United States Gypsum Company, all members of CCR,as well as other non-CCR-member manufacturers of asbestos-containing products. Theplaintiff alleged that he suffered from mesothelioma (a quickly progressing terminal cancer)resulting from his occupational exposure to asbestos-containing products manufactured andsold by the defendants. On December 2, 1999, the eve of the trial, the plaintiff orallyreached a settlement with the CCR defendants and then proceeded to a trial against othernamed defendants not represented by CCR. In negotiating the settlement with the agent forthe CCR defendants, the plaintiff agreed to accept a single sum in exchange for his releasingall CCR members, even those not named as defendants, from any liability.

On December 16, 1999, CCR sent the plaintiff a letter confirming the settlement. Theletter provided in pertinent part as follows:

"This letter will serve to confirm settlement of the above[-]captioned cases***[.] The date of this settlement is December 16, 1999.

You are aware that the Center for Claims Resolution (CCR) has independentlyand separately evaluated each of the claims, and the aggregate amount of thesettlement is the total of those evaluations in the settlement negotiations process. Itis understood that the law firm [representing CCR] will be allocating [amountredacted] to [the plaintiff] ***.

It is agreed and understood that this settlement fully releases all members ofthe CCR, whether or not such members were made parties to these lawsuits. Furthermore, it is understood that this settlement includes any and all companionactions in this or any jurisdiction for the above-referenced plaintiff.

In accordance with our settlement agreement, settlement funds will beforwarded to your firm ninety (90) days from the date of settlement, conditional uponreceipt of required supporting documentation, as well as properly executed releases.

***

Please be advised that the CCR will accept only Release(s) prepared by theCCR and properly executed by the plaintiff. Please be further advised that paymentwill not be issued prior to the CCR's receipt of such properly executed Release(s)." (Emphasis in original.)

Within two days of the plaintiff's receipt of this letter, CCR voted to terminate GAF'smembership in CCR effective January 17, 2000.

On March 9, 2000, CCR sent a letter to the plaintiff that read in pertinent part asfollows:

"Pursuant to the CCR's settlement with you, enclosed is a check for [amountredacted]. This check represents the total of the amounts due for each of the claimsin the attached listing, subject to payment at this time under the terms of thesettlement agreement, less the amounts payable for each of these claims by GAFCorporation-which total [amount redacted]. The CCR has billed GAF Corporationfor these amounts, but GAF has to date refused to pay such billings.

We will be contacting you in the near future to discuss these matters further. However, if you have immediate questions, please contact me."

The plaintiff negotiated the check enclosed with the March 9, 2000, letter. On April 5,2000, the plaintiff filed a motion to enforce the settlement agreement after unsuccessfullyattempting to resolve the issue of the unpaid portion of the settlement. The plaintiff allegedin his motion that his case was settled by CCR on behalf of Armstrong World Industries,Inc., The Asbestos Claims Management Corp., Certain-Teed Corp., GAF, QuigleyCompany, and United States Gypsum Company. He alleged further that the settlementdocuments provided by CCR were executed on February 17, 2000, and submitted forpayment, that the settlement payment had not been made in full as agreed upon under thesettlement, that disputes between members of CCR should not affect the settlement, and thata judgment for the full amount agreed to by CCR was sought against the corporationsrepresented by CCR in forming the settlement agreement.

Those defendants still represented by CCR responded to the plaintiff's motion byfiling a memorandum with an affidavit from CCR's special counsel (Hanlon affidavit) thatexplained CCR's Producer Agreement, the functions and operation of CCR, and CCR'srelationship with GAF. The defendants still represented by CCR also submitted variousexhibits, including the CCR Producer Agreement. GAF separately submitted memoranda,affidavits, and exhibits. On June 9, 2000, a hearing was held on the plaintiff's motion beforecircuit court judge Nicholas Byron. At the hearing, both GAF and the defendant CCRmembers agreed that CCR entered into an oral settlement on December 2, 1999, with theplaintiff for a single sum. Both GAF and the current members of CCR agreed that CCR, astheir agent, had the authority to represent and enter into a settlement on behalf of all of thenamed CCR defendants. CCR argued that the December 16 letter was the settlementagreement and that this agreement was ambiguous on its face regarding how the money wasto be paid. CCR asserted that, because all of the parties to the settlement agreementunderstood that each of the defendants was contributing its share to the total amount, GAFalone should be liable for the remaining balance owed the plaintiff. GAF responded byarguing that the only understanding regarding each defendant's contribution was unilateraland that neither it nor the plaintiff had anything to do with these allocations. The plaintiffechoed GAF's argument in noting that he did not enter into an agreement with any individualdefendant but, rather, negotiated the settlement with CCR, the agent for all of thedefendants.

CCR also argued that the letter and accompanying check sent to, and subsequentlynegotiated by, plaintiff on March 9, 2000, was an accord and satisfaction. For the court'sreview, CCR provided a copy of the letter it sent to plaintiff on March 9, 2000. The courtviewed the letter as merely an acknowledgment by CCR that it settled the case for the agreedamount stated and that it paid a certain amount on behalf of certain defendants, leaving GAFwith the balance due.

The court found in favor of the plaintiff and entered a judgment to enforce thesettlement agreement jointly and severally. The defendants made a timely appeal. Whilethis appeal was pending, GAF, Armstrong World Industries, Inc., and United States GypsumCompany filed for bankruptcy and have since been severed from this appeal.

II. ANALYSIS

The defendants' arguments stem from their contention that the letter of December 16,1999, is the settlement agreement which legally controls this case. While the defendantsacknowledge that there was an oral agreement entered into on December 2, 1999, theirposition suggests that they consider the December 2, 1999, oral agreement preliminary tothe final written agreement of December 16, 1999. The flaw in this reasoning, however, isthat beyond their mere assertion that the December 16, 1999, document is the correctagreement to be construed, there is nothing in the record to support this proposition.

In fact, language in the December 16, 1999, letter itself dictates otherwise. The letterbegins by stating, "This letter will serve to confirm settlement ***." A confirmation letterby definition addresses something that has already occurred. The defendants also point tothe fact that the letter does not mention the issue of joint or several liability in the event ofa nonpayment by a defendant. Seizing on this silence, the defendants then claim that theabsence of language regarding joint or several liability creates an ambiguity. The defendantsalso argue that the court erred in not conducting an evidentiary hearing on the extrinsicevidence that they contend supports a finding of several liability, or alternatively they arguethat the court should have conducted a jury trial on any disputed facts. Finally, they claimthat the plaintiff's negotiation of the check for partial payment constituted an accord andsatisfaction.

We begin by holding that the controlling settlement was the oral agreement enteredinto on December 2, 1999. Oral settlements are enforceable if there is an offer, anacceptance, and a meeting of the minds regarding the terms. Johnson v. Hermanson, 221Ill. App. 3d 582, 584, 582 N.E.2d 265, 267 (1991) (citing Sheffield Poly-Glaz, Inc. v.Humboldt Glass Co., 42 Ill. App. 3d 865, 868-69, 356 N.E.2d 837, 840 (1976)). An offer,or the acceptance thereof, must be so definite with respect to its material terms that thepromises and performances to be rendered by each party are reasonably certain. AcademyChicago Publishers v. Cheever, 144 Ill. 2d 24, 29, 578 N.E.2d 981, 983 (1991). A contract" 'is sufficiently definite and certain to be enforceable if the court is enabled from the termsand provisions thereof *** to ascertain what the parties have agreed to do.' " AcademyChicago Publishers, 144 Ill. 2d at 29, 578 N.E.2d at 983 (quoting Morey v. Hoffman, 12 Ill.2d 125, 131, 145 N.E.2d 644, 647-48 (1957)). A meeting of the minds between the partieswill occur where there has been assent to the same things in the same sense on all essentialterms and conditions. La Salle National Bank v. International Ltd., 129 Ill. App. 2d 381,394, 263 N.E.2d 506, 513 (1970). In this case, the record supports all the elements for avalid oral contract; in fact, none of the essential terms are in dispute. The parties agreed thatthe plaintiff was to receive a single sum of money from the CCR defendants in exchange fora release from liability for all CCR members, including those not named as defendants.

Having already determined that the settlement agreement at issue before this court isthe oral agreement of December 2, 1999, we find it irrelevant that the letter of December 16,1999, failed to make mention of joint or several liability. Nor does the fact that the partiesfailed to address this issue as a term in their oral settlement agreement affect the enforcementof this contract. Every feasible contingency that might arise in the future need not beprovided for in a contract for the agreement to be enforceable. Dato v. Mascarello, 197 Ill.App. 3d 847, 851, 557 N.E.2d 181, 183 (1989). "A court will not add another term aboutwhich an agreement is silent; no word can be added to or taken from the agreement tochange the plain meaning of the parties as expressed therein." American States InsuranceCo. v. A.J. Maggio Co., 229 Ill. App. 3d 422, 427, 593 N.E.2d 1083, 1086 (1992). Assuming, arguendo, there was an ambiguity regarding the liability issue, this still wouldnot have hindered enforcement, since such a provision would not be a material term. Ambiguity will prevent the enforcement of a contract only where the ambiguity affects thematerial terms of the contract. Wilson v. Middendorf, 248 Ill. App. 3d 870, 872, 619 N.E.2d179, 180 (1993).

We next turn to whether the court should have considered extrinsic evidence tosupport the defendants' contention that the parties intended several liability only. Extrinsicevidence is admissible to explain the meaning of words in a contract when there is anambiguity or the words are susceptible of different interpretations. Martindell v. Lake ShoreNational Bank, 15 Ill. 2d 272, 283, 154 N.E.2d 683, 689 (1958). This well-recognizedexception to the parol evidence rule does not apply to the instant case since there is noambiguity to clarify or words to interpret. Here, the parties simply omitted any reference tohow liability would be handled in the event of a default. It is understandable now, in lightof their dispute with GAF, why the defendants would wish for such a provision, hindsightbeing 20/20. However, a presumption exists "against provisions that easily could have beenincluded in the contract but were not." Klemp v. Hergott Group, Inc., 267 Ill. App. 3d 574,581, 641 N.E.2d 957, 962 (1994). It is not the court's role to supply missing terms in thiskind of situation. A contract does not become ambiguous just because the parties do notagree on its meaning. Pokora v. Warehouse Direct, Inc., 322 Ill. App. 3d 870, 876, 751N.E.2d 1204, 1209 (2001). Because there was no issue of ambiguity of a material term, thecourt properly did not consider extrinsic evidence.

Even if extrinsic evidence were proper in this case, we fail to see how theintroduction of the Producer Agreement and the Hanlon affidavit could have provided thecourt with any insight into the intentions of the parties when entering into the settlementagreement. The Producer Agreement is a contract between the CCR members that regulatesthe internal dealings of its members with respect to asbestos litigation. This documentreveals the unilateral intent of its members regarding rights and liabilities among themselvesand bears no legal relationship to the plaintiff. The Hanlon affidavit, filed by CCR's specialcounsel, does nothing more than explain how CCR itself cannot be held liable for thesettlement shortfall (which is not a point of contention) and expounds upon the meaning ofthe Producer Agreement and the reasons why GAF, not the CCR members, should be heldliable for the settlement shortfall. Both of these documents are legally irrelevant and onlyserve to interject extraneous matters.

Because we have found that the trial court properly excluded extrinsic evidence onthe issue of joint and several liability and because the parties omitted addressing this issuein their settlement, we now must look to principles of Illinois contract law to determinewhether the settlement is a joint and several obligation, as the plaintiff contends, or a severalobligation, as the defendants contend. Under Illinois law, generally, "all joint obligationsand covenants shall be taken and held to be joint and several obligations and covenants." 765 ILCS 1005/3 (West 2000); see also Brokerage Resources, Inc. v. Jordan, 80 Ill. App.3d 605, 608, 400 N.E.2d 77, 80 (1980). "If two or more parties to a contract owe a joint andseveral duty of performance to another party to the contract and the duty is not performed,each may be liable for the entire damages resulting from the failure to perform." BrokerageResources, Inc., 80 Ill. App. 3d at 608, 400 N.E.2d at 80. Here the defendants actedcollectively, through their agent, in promising a single performance (the payment of oneundivided sum to the plaintiff). The fact that the defendants agreed among themselves,unbeknownst to the plaintiff, that each would be liable to the plaintiff only for theirindividual share of the settlement as calculated by their agent does not prevent them frombeing held jointly and severally liable. In the absence of any language restricting thedefendants' liability to several, we hold that the trial court was correct in finding thedefendants jointly and severally liable. As the trial judge below aptly noted, "The liabilityis joint and several, any way you look at it."

We also hold that the trial court committed no error in not holding an evidentiaryhearing or a jury trial. At the hearing to enforce settlement, no one requested an evidentiaryhearing or a jury trial on any issue. An evidentiary hearing may be appropriate when thereare disputed issues regarding the formation and terms of a settlement agreement. JanssenBrothers, Inc. v. Northbrook Trust & Savings Bank, 12 Ill. App. 3d 840, 843, 299 N.E.2d431, 433 (1973). However, because the parties have not identified a relevant factual disputeto decide, an evidentiary hearing is not required. Schroeder v. CMC Real Estate Corp., 157Ill. App. 3d 757, 763, 510 N.E.2d 1045, 1049 (1987). "If the agreement is a valid contract,the parties may not repudiate it and the trial court may enforce it summarily." Lampe v.O'Toole, 292 Ill. App. 3d 144, 148, 685 N.E.2d 423, 425 (1997). The legal effect of theomitted provision on joint or several liability became a matter of law for the court todetermine. The court correctly ruled that the omission created joint and several liability asa matter of law.

Finally, we address the issue of accord and satisfaction. Accord and satisfaction isa well-settled doctrine. Where the facts upon which the claim of accord and satisfaction isasserted are not substantially disputed, the question of the creditor's assent is one of law tobe determined by the circuit court. Quaintance Associates, Inc. v. PLM, Inc., 95 Ill. App.3d 818, 822, 420 N.E.2d 567, 570 (1981). "An accord and satisfaction is an agreementbetween the parties which settles a bona fide dispute over an unliquidated claim." A.F.P.Enterprises, Inc. v. Crescent Pork, Inc., 243 Ill. App. 3d 905, 911, 611 N.E.2d 619, 623(1993). For an accord and satisfaction to operate, "there must be (1) an honest disputebetween the parties as to the amount due at the time payment was tendered; (2) a tender ofpayment with the explicit understanding of both parties that it is in full payment of alldemands; and (3) an acceptance by the creditor with the understanding that the tender isaccepted as full payment." A.F.P. Enterprises, Inc., 243 Ill. App. 3d at 911, 611 N.E.2d at623. "[P]artial payment of a fixed and certain demand which is due and not in dispute is nosatisfaction of the whole debt even where the creditor agrees to receive a part for the whole***." A.F.P. Enterprises, Inc., 243 Ill. App. 3d at 911, 611 N.E.2d at 623.

Again, the letter the defendants sent to the plaintiff on March 9, 2000, included, inpertinent part, the following language:

"Pursuant to the CCR's settlement with you, enclosed is a check for [amountredacted]. This check represents the total of the amounts due for each of the claimsin the attached listing, subject to payment at this time under the terms of thesettlement agreement, less the amounts payable for each of these claims by GAFCorporation-which total [amount redacted]. The CCR has billed GAF Corporationfor these amounts, but GAF has to date refused to pay such billings.

We will be contacting you in the near future to discuss these matters further. However, if you have immediate questions, please contact me."

In reviewing the March 9, 2000, letter the defendants sent to the plaintiff, we find that thedefendants have failed to establish that an accord and satisfaction occurred. First, neitherthe letter nor the record shows that an honest dispute existed between the defendants and theplaintiff concerning the amount that was due to the plaintiff. The only disputecommunicated in the letter involved CCR and GAF, not the plaintiff. The defendantscontend that there was an honest dispute concerning the liability of the other CCR membersfor GAF's share, as calculated by CCR. However, that is not a dispute concerning theamount owed to the plaintiff; instead, it is a dispute concerning who will pay the amountowed to the plaintiff. This dispute does not concern the plaintiff.

Second, the defendants' claim-that the letter accompanying the check stated that thecheck was in full satisfaction of the amount owed under the settlement-is contrary to theplain language of the letter. The letter merely indicates, as the trial judge observed, thatCCR paid a certain amount on behalf of certain defendants, leaving GAF with the balancedue.

Lastly, the defendants argue that the plaintiff's negotiation of the check tendered onMarch 9, 2000, represented his acceptance and understanding of the accord and satisfaction. However, based on our analysis above, the plaintiff cannot be said to have negotiated thecheck tendered by the defendants with the understanding or notice that he was accepting theamount as full payment. We conclude that none of the elements necessary to create a validagreement based on accord and satisfaction were present here. Accordingly, the circuit courtdid not error in rejecting the defendants' assertions at the June 9, 2000, hearing.

III. CONCLUSION

Public policy in Illinois favors settlements and dictates that, absent fraud or duress,settlements should be final. Johnson, 221 Ill. App. 3d at 585, 582 N.E.2d at 267 (citingFitzgerald v. Theisen, 101 Ill. App. 3d 193, 196, 427 N.E.2d 1044, 1046 (1981)). Thedefendants in this case acted, with others, to form an agreement in which they jointlypromised one single performance to one single promisee. However, the defendants'arguments throughout have focused little on the agreement entered into with the promiseebut, instead, have focused upon a dispute among the fellow promisors. Based on the recordbefore us, we hold that the circuit court's enforcement of the settlement agreement jointlyand severally is not against the manifest weight of the evidence. To hold otherwise, basedon the record before us, would dilute the binding effect of oral compromise-and-settlementagreements, permitting parties thereto to change their minds at their pleasure.

For the foregoing reasons, the judgment of the circuit court is affirmed.

Affirmed.

MAAG, P.J., and HOPKINS, J., concur.

 

NO. 5-01-0095

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT


 

LOUIS V. PRITCHETT, ) Appeal from the
) Circuit Court of
               Plaintiff-Appellee, ) Madison County.
)
v. ) No. 99-L-750
)
THE ASBESTOS CLAIMS MANAGEMENT )
CORPORATION, CERTAIN-TEED )
CORPORATION, and QUIGLEY COMPANY )
INC.,  )
)
              Defendants-Appellants, )
and )
)
ARMSTRONG WORLD INDUSTRIES, INC., )
GAF CORPORATION, and UNITED STATES )
GYPSUM COMPANY, ) Honorable
) Nicholas G. Byron,
              Defendants.  ) Judge, presiding.

 


Opinion Filed: July 26, 2002



Justices: Honorable Melissa A. Chapman, J.

Honorable Gordon E. Maag, P.J.

Honorable Terrence J. Hopkins, J.

Concur


Attorneys Russell K. Scott, Greensfelder, Hemker & Gale, 12 Wolf Creek Drive,

for Swansea, IL 62226; William Sheehan, Shea & Gardner, 1800

Appellants Massachusetts Avenue, N.W., Washington, DC 20036


Attorney John Simmons, Randall A. Bono, The Simmons Firm, LLC, 301 Evans

for Avenue, P.O. Box 559, Wood River, IL 62095

Appellee


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