Maxit, Inc. v. Van Cleve

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State: Illinois

Docket No: 105532 Rel

Case Date: 10/17/2008

Preview:Docket No. 105532.

IN THE SUPREME COURT OF THE STATE OF ILLINOIS

MAXIT, INC., Appellant, v. JOHN VAN CLEVE et al., Appellees. Opinion filed October 17, 2008.

JUSTICE FREEMAN delivered the judgment of the court, with opinion. Chief Justice Fitzgerald and Justices Thomas, Kilbride, Garman, Karmeier, and Burke concurred in the judgment and opinion.

OPINION In September 2006, the circuit court of Du Page County granted summary judgment in favor of plaintiff and against defendants John Van Cleve and his wife, Kelley Van Cleve. The appellate court reversed and remanded. 376 Ill. App. 3d 50. We granted plaintiff's petition for leave to appeal (210 Ill. 2d R. 315(a)), and, for the reasons set forth below, affirm the judgment of the appellate court. BACKGROUND On December 26, 2001, John suffered an injury to his back as a result of an automobile accident, when another car caused John's car to drive off the road. At the time of the accident, John was an employee of plaintiff and was working within the course and scope of his employment. On May 16, 2002, John filed a workers'

compensation claim against plaintiff with the Illinois Industrial Commission,1 case No. 02 WC 25917. John also filed a claim under plaintiff's underinsured-motorist policy No. 1035982371, which was held by CNA Insurance Companies (CNA). At the time of John's injury, plaintiff was not covered under any workers' compensation insurance policy. On September 10, 2004, defendants signed the release at issue in this appeal. This document, entitled "Release of All Claims," provides: "[1] FOR AND IN CONSIDERATION of the payment to us at this time of the sum of $800,000, Eight Hundred Thousand Dollars, the receipt of which is hereby acknowledged, we being of lawful age, do hereby release, acquit and forever discharge Maxit Inc., Transportation Insurance Co., and their agents, servants, successors, heirs, executors, insurers, administrators, all other persons, firms, corporations, associations or partnerships (`Releasees') or and from any and all actions, causes of action, claims, demands, damages, costs, loss of services, expenses and compensation, on account of, or in any way growing out of, any and all known and unknown personal injuries and property damage resulting or to result from an accident that occurred on or about 12/26/2001, and covered by Underinsured Motorist policy provisions in Policy No. 1035982371. [2] We hereby declare and represent that the injuries sustained are permanent and progressive and that recovery therefrom is uncertain and indefinite, and that in making this release and agreement it is understood and agreed that we rely wholly upon our own judgment, belief and knowledge of the nature, extent and duration of said injuries, with the advice of counsel and that we have not been influenced to any extent whatever in making this release by any representations or

On January 1, 2005, the Illinois Industrial Commission was renamed the Illinois Workers' Compensation Commission. See Roberson v. Industrial Comm'n, 225 Ill. 2d 159, 162 n.1 (2007), citing 820 ILCS 305/1(c) (West 2004).

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statements regarding said injuries, or regarding any other matters, made by the persons, firms or corporations who are hereby released, or by any person or persons representing him or them, or by any physician or surgeon by him or them employed. [3] In consideration of the aforesaid payment, John Van Cleve and Kelley R. Van Cleve agree to indemnify and hold forever harmless, Releasees, their heirs, successors, administrators, insurers or assigns from and against any and all claims, rights, duties, obligations, debts, liabilities, liens or causes of action of any kind and nature whether foreseen, unforeseen, contingent or actual, liquidated or unliquidated that have been or may hereafter and any time be made or brought against the said Releasees for the purpose of enforcing a further claim for damage on account of the alleged damages or injury sustained in consequence of the aforesaid accident. [4] It is further understood and agreed that this settlement is the compromise of a doubtful and disputed claim, and that the payment is not to be construed as an admission of liability on the part of the Releasees, by whom liability is expressly denied. [5] We further agree that this release shall not be pleaded by us as a bar to any claim or suit. [6] The undersigned acknowledge and agree that the aforesaid sum represents the full amount of damages due them according to the terms of Policy No. 1035982371 and further agree, in consideration of such payment, upon the Releasees request, to take such action as may be necessary to recover from the owner or operator of such underinsured automobile the damages suffered by the undersigned. In the event of a recovery, the Releasees shall be reimbursed out of such recovery to the extent of any payment made to the undersigned; and in addition, shall be reimbursed for expenses, costs and attorney's fees by it in connection with such action. under [sic] -3-

[7] This release contains the ENTIRE AGREEMENT between the parties hereto, and the terms of this release are contractual and not a mere recital. [8] We further state that we have carefully read the foregoing release and know the contents thereof, and we sign the same as our own free act." Nearly one year later, on September 6, 2005, John and plaintiff entered into a written agreement for settlement of John's previously filed workers' compensation claim, case No. 02 WC 25917. Under the agreement, which was approved by the Illinois Workers' Compensation Commission (Commission), plaintiff agreed to pay defendants $200,000 in settlement of the claim. On October 19, 2005, plaintiff filed its complaint against defendants in this case, alleging breach of the September 2004 release. In the complaint, plaintiff alleged that defendants breached the terms of the release by refusing to consider their claim for workers' compensation benefits released by the September 2004 agreement. Plaintiff claimed that this September 2004 release, "by its own terms, specifically included the release of [plaintiff] of any and all claims, of whatever nature or sort raised or to be raised by [defendants] that would arise out of or on account of[ ] the accident of December 26, 2001." According to plaintiff, the workers' compensation claim was included within the scope of the term "any and all claims" as stated in the release. Plaintiff sought, as damages, the $200,000 it was obligated to pay in settlement of the workers' compensation claim. Defendants filed a counterclaim against plaintiff, alleging that plaintiff fraudulently induced them to settle the workers' compensation claim for $200,000. Defendants also filed affirmative defenses. Thereafter, plaintiff filed a motion for summary judgment on its complaint and a motion for judgment on the pleadings regarding defendants' affirmative defenses and counterclaim. Plaintiff argued, among other things, that the language in the third paragraph of the September 2004 release clearly and unambiguously released plaintiff from any and all claims arising from the December 26, 2001, accident, including John's workers' compensation claim. -4-

Defendants pointed, in response, to the first paragraph of the release. According to defendants, this paragraph clearly limited the release to claims covered by the underinsured-motorist policy, which did not cover John's workers' compensation claim. Defendants also pointed to section 23 of the Workers' Compensation Act (Act), which provides, in pertinent part: "No employee *** shall have power to waive any of the provisions of this Act in regard to the amount of compensation which may be payable to such employee *** except after approval by the Commission." 820 ILCS 305/23 (West 2004). Defendants note that the September 2004 release was not approved by the Commission, and the release therefore could not have constituted a waiver of John's workers' compensation claim under the terms of the Act. Alternatively, defendants argued that the language in the release was ambiguous and summary judgment was improper. Defendants then filed a cross-motion for summary judgment. In September 2006, the circuit court granted summary judgment in favor of plaintiff and against defendants. The court also granted plaintiff's motion for judgment on the pleadings regarding defendants' counterclaim and affirmative defenses. In its order, the court concluded that the September 2004 release was clear and unambiguous on its face and, therefore, subject to enforcement as a matter of law. In the court's view, the release clearly expressed defendants' intent to release plaintiff from "any further financial responsibility proximately caused by the accident, and to indemnify [plaintiff] for any subsequent loss that might occur." With respect to defendants' claim that plaintiff's construction of the release contravened section 23 of the Act, the court agreed with plaintiff that defendants, in signing the release, did not waive their rights under the Act. Defendants were free to pursue those rights, but the release obliged defendants to make good on their indemnification promise to plaintiff. On appeal, defendants argued, inter alia, that the plain language of the release required judgment in their favor and that, by operation of law, the release did not release John's workers' compensation claim. The appellate court reversed and remanded. 376 Ill. App. 3d at 59. The court asserted that it was well settled that an employer could not ignore section 23 of the Act and enter into a settlement with its employee without the approval of the Commission. The court -5-

concluded that, absent Commission approval, the September 2004 release did not include within its scope John's workers' compensation claim. According to the court, defendants were entitled to prevail, as a matter of law, on their cross-motion for summary judgment. ANALYSIS Before this court, plaintiff argues that the appellate court: (1) incorrectly held that the September 2004 release was potentially ambiguous; (2) misapplied section 23 of the Act to the release; and (3) improperly gave defendants a double recovery for a single, indivisible injury. The purpose of summary judgment is to determine whether a genuine issue of material fact exists. Bagent v. Blessing Care Corp., 224 Ill. 2d 154, 162 (2007). Summary judgment is appropriate only where "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2

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