2020 IL App (1st) 192380-U
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
SECOND DIVISION December 22, 2020 No. 1-19-2380 ______________________________________________________________________________
IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________
SANDRA KLEIN-KOZIOL, as Special Administrator of ) the Estate of Timothy Koziol, Deceased, ) ) Plaintiff, ) Appeal from the ) Circuit Court of v. ) Cook County ) M-J-T-J CONTRACTORS & BUILDERS, INC., an ) No. 17 L 2370 Illinois Corporation, KEELEY CONSTRUCTION, INC., ) an Illinois Corporation, and BENSENVILLE 1, LLC, c/o ) The Honorable HAMILTON PARTNERS, INC., an Illinois Corporation, ) Moira S. Johnson, ) Judge Presiding. Defendants ) ) (M-J-T-J Contractors & Builders, Inc., and Keeley ) Construction, Inc., Defendants and Third-Party Plaintiffs- ) Appellants; William T. Connelly d/b/a Connelly Electric ) Company, Third-Party Defendant-Appellee).
PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the court. Justice Cobbs concurred in the judgment. Justice Pucinski dissented.
ORDER
¶1 Held: Trial court did not abuse its discretion in finding that settlement between plaintiff and third- party defendant was in good faith and dismissing contribution claims against third-party defendant. No. 1-19-2380
¶2 The defendants and third-party plaintiffs, M-J-T-J Contractors & Builders, Inc. (M-J-T-J
Contractors) and Keeley Construction, Inc. (collectively non-settling defendants), appeal the trial
court’s finding that the settlement between the plaintiff, Sandra Klein-Koziol, as Special
Administrator of the Estate of Timothy Koziol, deceased, and the third-party defendant, William
T. Connelly d/b/a Connelly Electric Company (Connelly Electric), was in good faith for purposes
of the Joint Tortfeasor Contribution Act (740 ILCS 100/0.01 et seq. (West 2018) (Contribution
Act)), and its dismissal of their claims for contribution against Connelly Electric. For the reasons
that follow, we affirm the order of the trial court.
¶3 I. BACKGROUND
¶4 On September 8, 2015, Timothy Koziol was working as an electrician at the jobsite of an
industrial construction project in Bensenville, Illinois. He was operating a scissor lift that was
extended approximately 20 to 25 feet above the ground when one of its wheels went into an
exposed “box-out” hole on the concrete floor of the jobsite. This caused the extended scissor lift
to tip and fall over, which in turn caused Koziol to fall out of it and strike his head on the concrete
floor. Koziol sustained severe injuries in that incident that resulted in his death.
¶5 On March 7, 2017, the plaintiff filed this action for Koziol’s wrongful death. The operative
second amended complaint asserts various theories of negligence against three defendants: (1) M-
J-T-J Contractors, the subcontractor on the project that had poured the concrete floor on which the
incident occurred, (2) Keeley Construction, the project’s general contractor, and (3) Bensenville
1, LLC c/o Hamilton Partners, Inc. (Hamilton Partners), the owner of the premises.
¶6 On August 30, 2017, Keeley Construction filed a third-party complaint against Connelly
Electric, which was Koziol’s employer. In count I, for breach of contract, Keeley Construction
alleged that Connelly Electric had breached its contractual obligation to maintain commercial
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general liability insurance naming Keeley Construction as an additional insured during the term of
the contract at issue. (Count I is not involved in this appeal.) In count II, for contribution, Keeley
Construction alleged that if it was found liable in tort to the plaintiff, then Connelly Electric would
be liable to Keeley Construction for contribution, based on Connelly Electric’s negligence in
failing to inspect the area where the plaintiff was working at the time of the occurrence, failing to
provide the plaintiff with a safe location in which to work, failing to warn the plaintiff of known
conditions existing on the subject premises, and failing to train and instruct the plaintiff on how to
perform his work in a safe manner.
¶7 Connelly Electric sought and obtained multiple extensions of time to answer or otherwise
plead in response to Keeley Construction’s third-party complaint. Then, on March 28, 2018,
instead of filing an answer or other pleading directed at the third-party complaint, it filed a motion
to dismiss count II of the third-party complaint with prejudice and for a finding that it had entered
into a good-faith settlement with the plaintiff under the Contribution Act. 740 ILCS 100/2 (West
2018). In an amended version of that motion filed the following week, Connelly Electric alleged
that, following arm’s-length negotiations, it had entered into an agreement with the plaintiff to
secure the dismissal of Keeley Construction’s third-party claim against it in exchange for (1)
payment to the plaintiff of $10,000 in “fresh money” (i.e., money that was in addition to what had
already been paid in Koziol’s workers’ compensation claim) that the plaintiff would have no
obligation to repay as part of the workers’ compensation lien, and (2) a conditional waiver of the
workers’ compensation lien by Connelly Electric’s workers’ compensation insurer.
¶8 That conditional lien waiver provided that, “should the underlying litigation be settled before
verdict,” then Connelly Electric and its workers’ compensation insurer would accept “a net thirty
percent (30%) of the gross settlement proceeds up to full satisfaction of its workers’ compensation
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lien,” which totaled $903,232.31. 1 However, “[s]hould this matter be tried to verdict in [the
plaintiff’s] favor,” then Connelly Electric and its workers’ compensation insurer “shall be entitled
to recover their workers’ compensation lien pursuant to 820 ILCS 305/5(b) [(West 2018)] from
said verdict proceeds.”
¶9 On August 21, 2018, initial responses in opposition to the motion for good-faith finding and
dismissal of count II were filed on behalf of all three defendants. 2 On September 12, 2018,
Connelly Electric filed its reply brief. On November 29, 2018, the matter proceeded to an initial
hearing before the trial court. At that hearing, the trial court noted that the defendants’ responses
had indicated that they required limited discovery to adequately respond to the motion for good-
faith finding. The defendants’ attorneys indicated that they required written discovery responses
and at least one deposition of a representative of Connelly Electric. The trial court stated that it
would allow that. There was further colloquy at the hearing about the extent to which discovery
would pertain to the merits of the case as opposed to issues of fraud, collusion, or wrongful conduct
in the settlement itself. The trial court stated that it would allow the defendants to conduct some
discovery into the merits of the case, because of the preliminary stage at which the settlement had
occurred. The trial court also stated that it was not going to limit in advance what the defendants
could ask, but instead it would entertain any objections by Connelly Electric to the defendants’
requests in discovery.
¶ 10 Discovery was propounded to Connelly Electric, and the case was continued several times
1 In the situation of a settlement before verdict, the plaintiff waived any right to reduce this amount to account for statutory attorney fees or the employer’s pro rata share of costs. See 820 ILCS 305/5(b) (West 2018). 2 M-J-T-J Contractors did not have a third-party complaint for contribution pending against Connelly Electric until March 7, 2019, when the trial court granted its emergency motion for leave to file such a pleading. It does not appear that Hamilton Partners ever filed any third-party complaint against Connelly Electric, and it is not a party to this appeal.
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on discovery issues. In March 2019, two motions to compel were filed by the defendants pertaining
to objections that Connelly Electric had raised to the interrogatories and production requests they
propounded. The motions to compel were fully briefed, and on May 10, 2019, following argument
(the transcript of which is not part of the record on appeal), the trial court entered a detailed written
order ruling on each objection raised by Connelly Electric to the written discovery. The trial court
further conducted an in camera inspection of documents claimed by Connelly Electric to be
privileged from discovery, and on August 12, 2019, it sustained Connelly Electric’s amended
privilege log. The trial court’s order from that date also granted the defendants leave to amend
their responses to Connelly Electric’s motion for good-faith finding.
¶ 11 In the amended response to the motion for good-faith finding by Keeley Construction and
Hamilton Partners, in which M-J-T-J Contractors later joined, the defendants argued that, by
providing for a payment of only $10,000 in fresh money without a waiver of the workers’
compensation lien, the proposed settlement was structured in a way that deprived the non-settling
defendants, at the outset of the case, of their right to obtain contribution from Connelly Electric in
an amount that was proportional to the potentially significant share of liability that Connelly
Electric had for Koziol’s death. They argued that, because the settlement provided that Connelly
Electric would pay only $10,000 while retaining its worker’s compensation lien, the settlement
was illusory, as Connelly Electric would essentially recoup that $10,000 when the workers’
compensation lien was reimbursed. They also argued that the effect of the settlement would be
that, in the event of a verdict against the non-settling defendants, they would be entitled to a setoff
of only $10,000 from the amount of the verdict; by contrast, if the workers’ compensation lien had
been waived as part of the settlement, then they could be entitled to a setoff of up to the
$903,232.31 in workers’ compensation benefits that the plaintiff was not required to repay.
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¶ 12 Additionally, the defendants argued that the $10,000 settlement was not reflective of
Connelly Electric’s potential contribution liability, but rather it was a nominal amount for a case
involving the wrongful death of a 53-year-old electrician earning $88,000 a year, survived by a
wife and three minor children. They asserted that Connelly Electric had significant means to
contribute to a settlement, including $2 million in liability insurance and an umbrella policy with
a $15 million limit. They asserted that the contract between Keeley Construction and Connelly
Electric provided that Connelly Electric’s potential contribution liability was not capped at the
amount of its worker’s compensation lien. They pointed out that Connelly Electric had agreed in
its contract with Keeley Construction to “ ‘furnish all labor materials, tools, supplies, equipment,
services, facilities, supervision, administration, and other things necessary or incidental to the
proper and complete performance and acceptance of the Work’ for the project.” Citing the report
of the Occupational Safety and Health Administration (OSHA) investigation of the incident, the
defendants pointed out that Connelly had provided Koziol with “training in operating the forklift.”
Finally, they asserted that Keeley Construction “was not responsible for, and did not control, the
protocols, procedures, supervision, and contractor safety of the premises as it was left to each
subcontractor to determine its own means of implementing protocols, supervision, and safety.”
¶ 13 In reply, Connelly Electric argued that the defendants, even after obtaining discovery, had
failed to point to any evidence of collusion, unfair dealing, or wrongful conduct on the part of the
settling parties. It further argued that the defendants had failed to cite any evidence suggesting that
Connelly Electric had any liability for the incident that led to Koziol’s death. It pointed out that
the OSHA inspection report relied upon by the defendants had assigned no liability to Connelly
Electric, proposed no citations against it, and found that the scissor-lift training it provided to
employees “ ‘was sufficient for OSHA standards.’ ” It cited a letter by the OSHA area director
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stating, “Our investigation could not establish that the employer had knowledge of Mr. Koziol
operating the scissor lift in the area at the time of the incident and that he was exposed to the
hazard.” It argued that $10,000 was sufficient consideration for the settlement to be in good faith.
Further, it denied that the defendants’ characterization of the $10,000 settlement as money that
would be refunded by the workers’ compensation lien. It argued that a lien waiver was not required
for a settlement to be in good faith. It argued that the defendants’ assertion that its contribution
liability was $903,232.31 or more was “wishful thinking” that the defendants failed to support by
affidavit, demand letter, or other evidence. It argued that the trial court did not need to determine
the merits of the tort case or rule on the respective liabilities of the parties to decide whether the
settlement was in good faith. And it argued that the “mechanism of the potential lien reduction” if
the case settled before verdict had the effect of promoting the overall settlement of the case
between the plaintiff and the defendants, and therefore the agreement advanced an important
purpose of the Contribution Act.
¶ 14 On October 22, 2019, the matter proceeded to oral argument, at which the parties made
arguments substantially similar to those in their respective briefs as set forth above. At the
conclusion of the hearing, the trial court stated that, given the settlement’s provision that the
workers’ compensation lien would be in full force and effect if the case went to verdict, it found
that the $10,000 payment (which the court stated it did not find to be “fresh” money) was sufficient
in light of the provision that the workers’ compensation reimbursement would be 30% in the event
of a settlement. The court stated that the defendants who remained at the time of verdict would be
entitled to a setoff of $10,000. Therefore, the trial court determined that the settlement was in good
faith based on the fact that “there is no evidence of any kind of fraud or collision, and we don’t
have any evidence of a substantial pro rata share of fault in this case.” It therefore dismissed with
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prejudice count II of Keeley Construction’s third-party complaint against Connelly Electric and
M-J-T-J Contractors’ third-party complaint against Connelly Electric, and it barred any claim for
contribution by Hamilton Partners against Connelly Electric. It also made a finding that no just
reason existed to delay either enforcement or appeal of its order. Ill. S. Ct. R. 304(a) (eff. Mar. 8,
2016). Keeley Construction and M-J-T-J Contractors filed a timely notice of appeal.
¶ 15 II. ANALYSIS
¶ 16 The non-settling defendants argue on appeal that the trial court abused its discretion in finding
that the settlement between the plaintiff and Connelly Electric was in good faith, because it failed
to equitably apportion damages among the tortfeasors and because the totality of the circumstances
demonstrates that its finding of good faith was unreasonable and arbitrary.
¶ 17 The Contribution Act provides that where two or more persons are subject to tort liability
arising out of the same injury or wrongful death, there is a right of contribution among them. 740
ILCS 100/2(a) (West 2018). However, a tortfeasor is discharged from liability for contribution to
the other tortfeasors if that tortfeasor enters into a “good faith” settlement with the injured party,
although the non-settling tortfeasors are then entitled to a setoff in the injured party’s claims
against them for the amount of that settlement. Id. § 2(c), (d). The Contribution Act seeks to
promote two important public policies: (1) the encouragement of settlements, which it promotes
by providing that a tortfeasor who enters into a good-faith settlement with the plaintiff is
discharged from any contribution liability to a non-settling tortfeasor; and (2) the equitable
apportionment of damages among tortfeasors, which it promotes by creating a right of contribution
among tortfeasors and by providing that the amount a plaintiff recovers on a claim against a non-
settling tortfeasor will be reduced or set off by the amount of the settlement. Antonicelli v.
Rodriguez, 2018 IL 121943, ¶ 13.
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¶ 18 The only limitation that the Contribution Act places on the right to settle is that it be in “good
faith.” Id. ¶ 14. The Contribution Act does not define “good faith” or provide any procedural
guidelines as to how or when a trial court should make a good-faith determination. Johnson v.
United Airlines, 203 Ill. 2d 121, 128 (2003). Whether a settlement satisfies the requirement of
good faith is a matter left to the discretion of the trial court, based on the trial court’s consideration
of the totality of the circumstances. Antonicelli, 2018 IL 121943, ¶ 23. While no single precise
formula exists for determining what constitutes good faith that is applicable in every case, a
settlement will not be found to be in good faith where it conflicts with the terms of the Contribution
Act, where it is inconsistent with the important public policies sought to be promoted by the
Contribution Act, or where the settling parties engaged in wrongful conduct, collusion, or fraud.
Id. A court deciding whether a settlement was negotiated in good faith must strike a balance
between the two important policies of encouraging settlements and promoting the equitable
apportionment of damages among tortfeasors. Johnson, 203 Ill. 2d at 133. A trial court’s finding
that a settlement was made in good faith is a matter within the trial court’s discretion, and we will
reverse a finding of good faith only if the trial court abused its discretion. Antonicelli, 2018 IL
121943, ¶ 25.
¶ 19 In the evaluation of whether a settlement is in good faith, the settling parties carry the initial
burden of making a preliminary showing of good faith. Johnson, 203 Ill. 2d at 132. This requires
at a minimum that the settling parties show the existence of a legally valid settlement agreement.
Id. However, not all legally valid settlement agreements satisfy the good-faith requirement of the
Contribution Act, and therefore other factual evidence may be necessary before the court may
initially determine whether a settlement is fair and reasonable in light of the policies underlying
the Contribution Act. Id. Once the settling parties make a preliminary showing of good faith, the
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burden shifts to the parties challenging the settlement to prove the absence of good faith by a
preponderance of the evidence. Id. The trial court is in the best position to decide what type of
hearing is necessary to fully adjudicate the issue of good faith. Id. at 136. Likewise, is within the
trial court’s discretion to determine whether additional discovery or other materials are necessary
to reach a finding of good faith. Snoddy v. Teepak, Inc., 198 Ill. App. 3d 966, 969 (1990). A trial
court is not required to conduct an evidentiary hearing to determine the tortfeasors’ relative
culpability, and the trial court does not need to decide the merits of the tort case or rule on the
respective liabilities of the parties before making a good faith determination. Johnson, 203 Ill. 2d
at 139. A court is capable of ruling on good faith without a precise determination of the overall
damages suffered by the plaintiff or the settling tortfeasors’ proportionate liability. Id.
¶ 20 Disparity between the amount of the settlement and the amount initially sought by the
plaintiff is not an accurate measure of good faith, and the small amount of a settlement alone does
not require a finding of bad faith. Id. at 136-37. Rather, “[t]he amount of a settlement must be
viewed in relation to the probability of recovery, the defenses raised, and the settling party’s
potential legal liability.” Id. at 137. Also, in a situation such as this where the settlement is between
a plaintiff and an employer sued as a third-party defendant, the settlement will not be found to lack
good faith merely because the employer or its insurance company has a workers’ compensation
lien that is not waived as part of the settlement. Romack v. R. Gingerich Co., 314 Ill. App. 3d 1065,
1069 (2000). Rather, adequate consideration exists where a plaintiff-employee receives cash in
excess of the workers’ compensation benefits received for which the employer or insurance
company retained its lien. Id.
¶ 21 The non-settling defendants’ overall argument on appeal is that the settlement between the
plaintiff and Connelly Electric was not in good faith because it failed to promote “the equitable
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apportionment of damages among tortfeasors,” which is one of the two important policies
underlying the Contribution Act, and that the totality of the circumstances and settlement terms
demonstrated that the trial court’s finding of good faith was unreasonable and arbitrary. The non-
settling defendants’ arguments are comprised of several largely interrelated aspects, and we
summarize these as follows.
¶ 22 One aspect of their argument involves the timing of the settlement. Here, the plaintiff and
Connelly Electric reached a settlement at the outset of the case, before Connelly Electric had even
filed an answer or other pleading in response to the third-party complaints filed against it. (The
non-settling defendants repeatedly point out that Connelly Electric obtained multiple extensions
of time to answer or otherwise plead and never did so.) The non-settling defendants contend that
a settlement at this preliminary juncture deprived them of information about what defenses
Connelly Electric had to liability and an opportunity to conduct meaningful discovery into
Connelly Electric’s liability for the incident that led to Koziol’s death. Relatedly, they contend that
the trial court improperly made the good-faith determination based on a record that lacked adequate
information for it to evaluate Connelly Electric’s legal liability, its defenses, and the probability of
recovery against it. Although the trial court allowed them limited discovery, they argue that its
sustaining of objections by Connelly Electric to discoverable facts and evidence precluded them
from conducting the necessary investigation into the settlement negotiations and the involvement
that Connelly Electric had in the training and supervision of its employees.
¶ 23 A second aspect of the non-settling defendants’ argument involves the $10,000 payment by
Connelly Electric to the plaintiff. The non-settling defendants contend that this is a nominal
settlement amount for a case involving the wrongful death of a 53-year-old electrician survived by
a wife and minor children, and indeed the trial court characterized this a “cost of defense”
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settlement. Thus, they argue, it is not reflective of Connelly Electric’s actual exposure or liability.
They point out that $10,000 is only about 1% of Connelly Electric’s workers’ compensation lien,
which is $903,232.31, and they therefore argue that Connelly Electric is obtaining a discharge
from any contribution liability to them for a sum reflecting approximately 1% of its potential
liability. They further contend that $10,000 actually reflects less than 1% of its potential
contribution liability because its subcontract with Keeley Construction contains a “Kotecki waiver”
whereby its contribution liability is not capped at the amount of its workers’ compensation lien. 3
¶ 24 A third aspect of the non-settling defendants’ argument involves the fact that Connelly
Electric did not waive its workers’ compensation lien as part of the settlement agreement, instead
retaining the right to be reimbursed at 30 percent of the amount of any settlement, or under the
terms of the statute if the case is tried to verdict. They argue that this has the effect of making the
$10,000 payment illusory, because Connelly Electric is likely to recoup this money many times
over when it recovers on its workers’ compensation lien in a later settlement or verdict. They argue
that it is thus a $10,000 loan instead of a settlement, and therefore it is not a good faith settlement.
They argue that if Connelly Electric had waived its workers’ compensation lien, then the non-
settling defendants would be entitled to a setoff of an amount up to at least $903,232.31, whereas
by retaining its lien, they are limited to a setoff of only $10,000. Thus, they argue, the settlement
unfairly allowed Connelly Electric to shift its entire risk of liability onto them by depriving them
of their right to contribution and limiting them to a nominal setoff, while it paid only nominal
consideration and retained the right to fully recover under its lien. They also contend that Connelly
3 In Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 165 (1991), the supreme court held that the maximum liability that a plaintiff’s employer has in a third-party action for contribution is limited to its workers’ compensation liability to its employee. However, through a contractual provision commonly referred to as a “Kotecki waiver,” an employer may waive this limitation and become liable for its full pro rata share of contribution. See Virginia Surety Co. v. Northern Insurance Co. of New York, 224 Ill. 2d 550, 558 (2007).
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Electric’s “sliding scale” right to recover 30 percent of any settlement proceeds does not have the
effect of promoting the overall settlement of the case, since Connelly Electric can still recover the
full amount of its lien if the plaintiff obtains a settlement in excess of $2.7 million.
¶ 25 We have reviewed the briefs and discovery documents submitted to the trial court, along with
the arguments made to the trial court at the hearings on the motion. After doing so and also
considering the parties’ arguments in this court, we conclude that the trial court did not abuse its
discretion in determining that the settlement agreement between the plaintiff and Connelly Electric
was in good faith. Regarding the timing of the settlement and the information available to the non-
settling defendants and the trial court, the transcript of the hearing of November 29, 2018, reveals
that the trial court recognized the concern that the purported settlement had occurred at a
preliminary stage of the case, before the parties had engaged in any meaningful discovery. As
such, the trial court allowed the non-settling defendants to conduct discovery that was not limited
merely to issues surrounding the settlement negotiations (which Connelly Electric had argued that
the discovery should be limited to), but it allowed some discovery into the merits of the claims
against Connelly Electric. The trial court also indicated that it would allow the non-settling
defendants to take a deposition of at least one representative of Connelly Electric, which is all that
they suggested at that hearing. There is no indication in the record that they in fact deposed anyone
from Connelly Electric. While the non-settling defendants complain about the fact that the trial
court later sustained some of Connelly Electric’s objections to the written discovery, they raise no
claim in this court that the trial court abused its discretion in doing so. Likewise, the non-settling
defendants make no claim that the trial court abused its discretion by limiting the amount of
discovery it allowed them to obtain prior to ruling on the motion for good-faith finding. See
Snoddy, 198 Ill. App. 3d at 969 (allowance of additional discovery before making a finding of
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good faith is within the trial court’s discretion).
¶ 26 Given the discovery allowed by the trial court, we find the determinative factor to be that the
non-settling defendants are unable to show through evidence, affidavits, or even attorney
arguments that there was some act or omission on the part of Connelly Electric suggesting that it
had any liability for the incident that led to Koziol’s death. As we noted above, the trial court
explained that one of the principal reasons for its finding that the settlement was in good faith was
that “we don’t have any evidence of a substantial pro rata share of fault in this case” on the part
of Connelly Electric. This was an accurate statement by the trial court. Absent any ability on the
part of the non-settling defendants to point to some act or omission suggesting liability on the part
of Connelly Electric, we cannot conclude that a settlement for $10,000 and a conditional waiver
of its workers’ compensation lien failed to reflect the probability of recovery against Connelly
Electric, its defenses, or its potential legal liability, or that it otherwise failed to equitably apportion
damages among the tortfeasors. See Johnson, 203 Ill. 2d at 137.
¶ 27 Initially, we find that the information before the trial court was adequate to support a
preliminary showing of good faith by the settling parties. Id. at 132. The trial court had before it a
legally valid settlement agreement, setting forth the terms to which the plaintiff and Connelly
Electric had agreed. Additionally, at the hearing on October 22, 2019, Connelly Electric’s
attorneys argued to the trial court that the discovery conducted by the non-settling defendants had
shown no evidence of liability on the part of Connelly Electric. They cited the report of the OSHA
investigation showing no findings of any safety or training violations by Connelly Electric. That
OSHA investigation report, which was before the trial court, indicated that Koziol worked as a
foreman for Connelly Electric, that he had been alone in the building when the incident occurred,
and that nobody else had been aware that he was operating the scissor lift in the area at issue or
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was exposed to a hazard. The OSHA report also indicated that Connelly Electric had provided
documents to OSHA showing that Koziol had received training in the use of a scissor-lift. It
indicated that other employees of Connelly Electric had been interviewed about their scissor-lift
training and that the training was sufficient for OSHA standards. Included with the report was a
letter from the OSHA area director stating, “Our investigation could not establish that the employer
had knowledge of Mr. Koziol operating the scissor lift in the area at the time of the incident and
that he was exposed to the hazard.” The report and letter indicated that no citations had been issued
by OSHA against Connelly Electric. Although we agree with the non-settling defendants that the
OSHA report would likely be inadmissible at trial, we see no bar to the trial court’s reliance upon
it in evaluating the good faith of a settlement. See Stickler v. American Augers, Inc., 303 Ill. App.
3d 689, 694 (1999) (citing liability conclusions of OSHA investigation as a basis for finding that
trial court erred in finding settlement was in good faith).
¶ 28 Because the settling parties made a sufficient initial showing of good faith, the burden shifted
to the non-settling defendants to prove the absence of good faith by a preponderance of the
evidence. Id. Here, based on the fact that they were unable to point to any act or omission on the
part of Connelly Electric suggesting it bore some liability for the incident at issue, the trial court
did not abuse its discretion in determining this burden had not been met. In their briefs in the trial
court and before this court, the non-settling defendants cite various provisions in the contract
between Connelly Electric and Keeley Construction. For example, they cite Connelly Electric’s
contractual agreement with Keeley Construction to “ ‘furnish all labor materials, tools, supplies,
equipment, services, facilities, supervision, administration, and other things necessary or
incidental to the proper and complete performance and acceptance of the Work.’ ” They cited
Connelly Electric’s contractual agreement that it “ ‘has inspected the job site and is acquainted
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with the actual conditions and is not relying on any representations of [Keeley Construction]
regarding the conditions of the site.’ ” They cite its agreement that Keeley Construction’s
coordination and scheduling direction would not relieve Connelly Electric from responsibility
“ ‘for the Work, including, but not limited to responsibility for construction means, methods,
techniques, sequences or procedures, or for safety precautions and programs in connection with
the Work.’ ” Finally, they cite its contractual agreement “ ‘that safety and the prevention of
accidents to workers engaged in Subcontract Work is solely its responsibility.’ ” While we do not
dispute that these provisions could give rise to tort liability on the part of Connelly Electric if it
failed to fulfill these duties under the contract, what is absent in this case is evidence or argument
pointing to some act or omission by Connelly Electric that in fact violated these contractual duties
or otherwise potentially amounted to negligence. The mere existence of these contractual
provisions combined with the speculative assertion that they may have been violated in some
unspecified way is not sufficient to show that Connelly Electric bore some liability in this case,
such as to show that a settlement for $10,000 and a conditional lien waiver failed to adequately
reflect the probability of recovering against Connelly Electric, its defenses, its potential liability,
or other inequitable apportionment of damages among the tortfeasors. See id. at 137.
¶ 29 The failure to point to some act or omission potentially giving rise to liability on the part of
Connelly Electric distinguishes this case from other cases in which the appellate court has reversed
trial courts’ findings of good faith on the basis that a settlement conflicted with the Contribution
Act’s policy of encouraging the equitable apportionment of damages among tortfeasors. In
Stickler, 303 Ill. App. 3d at 694, relied upon by the non-settling defendants, this court found a
settlement was not in good faith in part because the employer of the plaintiff’s decedent was
seeking to be released from contribution liability for relatively nominal consideration despite
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evidence that OSHA had “conducted an investigation and placed full culpability for the accident”
on the decedent’s employer. In Associated Aviation Underwriters, Inc. v. Aon Corp., 344 Ill. App.
3d 163, 177-78 (2003), a settlement for $6 million in an action seeking $28 million in property
damage subrogation was found not to be in good faith, where the released defendants’ “settlement
payment was grossly disproportionate to their relative liability” based on a jury’s determination in
a related lawsuit that they were 90% liable for the aircraft accident at issue. In Warsing v. Material
Handling Services, Inc., 271 Ill. App. 3d 556, 561 (1995), a $1,000 settlement in a wrongful death
case was found not to be in good faith where the court found that the “evidence supports [the non-
settling defendant’s] assertion that [the settling third-party defendant’s] use of the forklift was the
primary cause of the accident.” By contrast, this court has affirmed the good faith of settlements
for relatively nominal consideration where there is no evidence of a negligent act or omission by
the settling tortfeasor. Johnson v. Johnson, 386 Ill. App. 3d 522, 555 (2008) (affirming good faith
of $7,500 settlement between father named as third-party defendant and his plaintiff-daughter,
where there was no evidence father acted negligently in failing to supervise daughter).
¶ 30 We further reject the argument that the settlement here was structured in such a way as make
the $10,000 payment “illusory” or to make it an improper loan instead of a settlement. Courts
evaluating the good faith of settlements have recognized the validity of contingent lien waivers,
whereby a settling third-party defendant with a workers’ compensation lien agrees to waive all or
part of its lien with respect to a settlement while retaining the right to recover under its lien in the
event the case proceeds to verdict. See, e.g., Bayer v. Panduit Corp., 2015 IL App (1st) 132252,
¶ 31, rev’d in part on other grounds, 2016 IL 119553; Romack, 314 Ill. App. 3d at 1068-70;
Cleveringa v. J.I. Case Co., 192 Ill. App. 3d 1081, 1085-87 (1989). Nothing about such agreements
alone indicates an absence of good faith.
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¶ 31 Here, the $10,000 in cash that Connelly Electric is paying to the plaintiff as part of the
settlement is separate from and additional to the benefits it paid as part of Koziol’s workers’
compensation claim. Thus, regardless of how this case later resolves, Connelly Electric will have
paid the plaintiff $10,000 more than it has the ability to recoup through its workers’ compensation
lien. If the case resolves through a defense verdict, Connelly Electric will still have paid the
plaintiff $10,000 in addition to its workers’ compensation obligations that it cannot recover. If the
case resolves through settlement before verdict for an amount that allows for full satisfaction of
the workers’ compensation lien under the terms of the settlement agreement, then Connelly
Electric will still have paid the plaintiff $10,000 more than it can recover. Every potential
resolution between these two ends of the spectrum likewise results in Connelly Electric having
paid the plaintiff at least $10,000 more than the percentage it can recover under its workers’
compensation lien pursuant to the terms of the settlement agreement. As such, we do not find the
$10,000 payment to be an “illusory” settlement. See Bayer, 2015 IL App (1st) 132252, ¶ 31
(rejecting similar argument that employer’s right to recover under conditional lien waivers made
settlement “illusory”). Similarly, because the $10,000 payment is separate from and additional to
the workers’ compensation benefits paid, and it is not money that must be repaid to Connelly
Electric under the workers’ compensation lien or otherwise, we reject the non-settling defendants’
argument that this is an improper loan as opposed to a settlement. Ross v. Illinois Central R.R. Co.,
2019 IL App (1st) 181579, ¶ 33; Cleveringa, 192 Ill. App. 3d at 1087.
¶ 32 Finally, we reject the non-settling defendants’ argument that the settlement agreement’s
provision that Connelly Electric will accept 30% of any gross settlement proceeds up to full
satisfaction of its workers’ compensation lien if settlement occurs before verdict contravenes the
policy promoted by the Contribution Act of promoting the overall settlement of the entire
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litigation. See Ross, 2019 IL App (1st) 181579, ¶ 34 (citing In re Guardianship of Babb, 162 Ill.
2d 153, 178 (1994)). The non-settling defendants argue that this provision has the effect of placing
them “in a difficult position with an extremely large lien looming in the back that the parties will
have to account for if attempting to resolve.” This is not an accurate characterization. Rather, this
provision of the settlement agreement relieves the plaintiff and the non-settling defendants from
having to “account for” a lien in excess of $900,000 if they attempt to settle the case in the future.
Because of this provision, they will be able to engage in settlement negotiations knowing in
advance that, regardless of the amount for which the case settles, it will be sufficient for the
plaintiff to satisfy the obligation to reimburse the workers’ compensation lien while still receiving
at least 70% of the settlement funds. By enabling this, the settlement provision at issue can be of
benefit to all parties in promoting the overall settlement of this ligation in the future.
¶ 33 For the reasons set forth above, we hold that the trial court did not abuse its discretion in
finding that the settlement between the plaintiff and Connelly Electric was in good faith. We have
reviewed the remaining arguments raised by the non-settling defendants against the good-faith
nature of this settlement and find no merit to them.
¶ 34 Before concluding, however, we do wish to emphasize that, in general, we would not
encourage a settlement at the very outset of a construction negligence case between a plaintiff and
a third-party defendant employer that retains a workers’ compensation lien. First, we acknowledge
that the potential exists in this context for collusion or bad faith. A plaintiff and an employer with
a workers’ compensation lien named as a third-party defendant are not necessarily litigation
adversaries in the same way that other parties are. Frequently, both will have an interest in
maximizing the liability of the defendants while minimizing the liability of the employer, so as to
obtain a sufficient recovery to repay the workers’ compensation lien and also compensate the
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plaintiff for the damages sustained. The employment relationship may also present incentives to
settle that are unrelated to the merits of the litigation. Also, this case illustrates how a settlement
between them at the outset of the case can deprive the non-settling defendants and the trial court
of discovery into the employer’s liability and defenses, and thus the normal discovery process is
upended while the motion for good-faith finding is resolved. Indeed, it does not appear to us that
much discovery has actually occurred in this case despite the fact that it has been pending for
almost four years. It would have been better for all parties involved to proceed with some discovery
and present the motion for good faith finding at a time when more information was available.
However, as discussed above, we believe that the trial court here was sensitive to these concerns,
handled the matter appropriately, and ultimately made a finding of good faith that was not an abuse
of discretion.
¶ 35 III. CONCLUSION
¶ 36 The trial court’s order finding that the settlement between the plaintiff and third-party
defendant Connelly Electric was in good faith and dismissing the claims for contribution against
Connelly Electric is affirmed.
¶ 37 Affirmed.
¶ 38 JUSTICE PUCINSKI, dissenting:
¶ 39 With the greatest respect to my colleagues, I dissent.
¶ 40 The majority says that “In general, we would not encourage a settlement at the very outset of
a construction negligence case between a plaintiff and a third party defendant employer that retains
a workers’ compensation lien.” And then the majority does just that.
¶ 41 There was virtually no discovery. The OSHA report is not evidence. Connelly did retain its
workers compensation lien. Without full discovery there can be no true evaluation of the
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employer’s liability and/or defenses. As the majority states: “the normal discovery process was
upended” by this very early settlement.
¶ 42 The majority blames the defense for not providing proof or even adequate pleadings for its
claims that the settlement was not in good faith.
¶ 43 Without discovery the defense cannot provide that proof or prepare adequate pleadings.
¶ 44 To put the defense in a “catch-22” is, I believe, is a mistake.
¶ 45 I would reverse the circuit court’s decision to find that the settlement between plaintiff and
third-party defendant was in good faith and remand this case for further discovery.
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