Focus on drunk driving
The body of the amicus brief written by William Lazarus and submitted to the Illinois Supreme Court by ITLA follows:
Overview
On Stage Productions, Inc. banks on its own lawlessness in arguing that its wanton behavior is immune from the rule of law. While suggesting that plaintiffs may sue the store that sold the bottles of Captain Morgan rum and Grey Goose vodka that John D. Homatas and John D. Chiariello brought into its Diamonds Gentlemen’s Club on January 4, 2006 (Br. 16), On Stage asserts that because it did not have a license to sell liquor, it cannot be held responsible for encouraging Homatas and Chiariello to drink beyond drunkenness, its ensuing ejection of the men from the club, and its direction that Homatas drive away with his friend sitting beside him. Homatas became persona non grata after he became so sick from drink[1] that he vomited in the club’s bathroom. Rather than deal with more unpleasantness or even take the time to order a taxi, On Stage opted to require Homatas to break the law and drive away drunk, to the grave endangerment of the driving public, and resulting in the deaths of Chiariello, April Simmons and her 8.5-month old daughter in utero, Addison Elizabeth.
Challenging the appellate court’s determination that it may be held liable for its in-concert activity under principles set forth in §876 of the Restatement (Second) of Torts, On Stage bluntly asserts, “The allegations that On Stage brought Homatas’s car to him, opened said door, and directed him to leave cannot be deemed ‘substantial assistance’.” (Br. 46) Plaintiffs’ complaints, however, do not state or suggest that Homatas wanted to leave the club or would have been able to find or even get into his car without the assistance of the club’s valet. Homatas’ illegal drive, and the ensuing tragedy, would not have occurred without the club’s encouragement, under the facts of the complaints viewed in the light most favorable to the plaintiffs. Even if On Stage’s actions were not deemed to constitute substantial assistance or encouragement under Restatement §876(b), the club would still be liable under §876(a) for its tortious act done in-concert with Homatas. The club ordered Homatas to leave the club and drive away in violation of the law, and Homatas obeyed. The resulting loss of life was utterly foreseeable, which is why drunk driving is a crime.
On Stage seeks to avoid responsibility for its actions with a sweeping argument that would elevate dicta into inexorable and unchallengeable legal principle and warp the concept of probable cause beyond the bounds of precedent, reason and common sense. It also seeks to avoid responsibility by predicting a parade of horribles if this Court upholds the trial and appellate court decisions below. However, under the narrow facts and extraordinarily egregious circumstances of this case, declining defendant’s motion to dismiss will not lead to sweeping and unpredictable changes contrary to prior holdings of this Court. This case does not involve a licensed purveyor of liquor. Nor does it involve a social host. Licensed taverns will continue to enjoy the protections, along with shouldering the burdens, imposed by the Dramshop Act. Social hosts will continue to be afforded the same immunities they have enjoyed thus far.
On Stage allegedly operated its striptease club without a liquor license as a premeditated way of avoiding responsibility and maximizing profits to the grave expense of the traveling public. On Stage then ordered (the Chiariello complaint) or effectively required (the Simmons complaint) its extremely intoxicated customer to break the law and drive away. At this stage, all the plaintiffs’ allegations must be taken as true and considered in the light most favorable to them. Jarvis v. S. Oak Dodge, 201 Ill. 2d 81, 86 (Ill. 2002). Allowing On Stage to be held accountable for its wrongful actions does not result in any departure, much less a radical departure, from the rule of law. To the contrary, it enables application of well established common law principles to restrain lawless behavior that threatened life and led to death.
The factual allegations of both the Homatas and the Simmons complaints amount to allegations of substantial assistance or encouragement sufficient to support liability under the principles stated in the Restatement (Second) of Torts §876(b). They also support allowing a jury to find liability under §876(a) since On Stage directed Homatas to commit a crime in ordering him to leave the club and drive away when he was intoxicated. In ordering violation of the law against driving while intoxicated, On Stage became a participant in the crime. The excuse, “I was only following orders” does not justify commission of a crime and insulate the actor from liability for the resulting injury. The assertion, “I was only giving the orders” cannot excuse the person who directs the crime. See Lambert v. Lake Forest, 186 Ill. App. 3d 937, 944 (2nd Dist. 1989) Thus, under the explicit allegations of the Chiariello complaint, On Stage may be held liable for its in-concert action under §876(a) of the Restatement as well as under §876(b). So, too, with the Simmons complaint. In addition to detailing substantial assistance or encouragement, the Simmons allegations that On Stage required Homatas and Chiariello to leave the club, brought around Homatas’ vehicle, and allowed Homatas to drive away are tantamount to a requirement that he commit the crime of drunk driving, given the totality of the circumstances viewed in the light most favorable to plaintiffs.
The appellate court aptly details the allegations of the plaintiffs. Simmons v. On Stage Productions, Inc., 386 Ill.App.3d 998, 999-1001 (2d Dist. 2008). The Illinois Trial Lawyers Association adopts those allegations, including the court’s conclusion that On Stage allegedly required that Homatas drive away while he was extremely intoxicated.
ARGUMENT
I. On Stage overstates preemption.
On Stage quotes no language in the Illinois Dram Shop Act, Liquor Control Act or any other law to show any legislative intent to preempt the plaintiffs’ common law action against it. Rather, it argues that Illinois courts long have “consistently ruled that the field of alcohol related liability is preempted by legislation and have consistently refused to recognize any cause of action for alcohol related liability beyond those explicitly provided for by the General Assembly.” (Br. at 4.) While On Stage invokes dicta in Wakulich v. Mraz 203 Ill.2d 223 (2003), and other cases to support its claim, the holding in Wakulich itself shows the sweeping dicta does not reflect the reality, but is restricted to cases involving taverns and social hosts selling or giving away alcohol, and even then the dicta is overbroad. In this case, On Stage neither sold nor gave away alcohol, so its claim of absolute preemption is not well founded. Most importantly, On Stage’s liability independently arises under the common law as a result of its in-concert acts in assisting, encouraging, and directing Homatas’ drunk driving.
On Stage correctly comments that this case is alcohol related. So was Wakulich, where plaintiffs alleged that defendants had induced Elizabeth Wakulich to drink herself into a coma, and then voluntarily undertook to care for her in a negligent fashion, resulting in her death. While the Court held to social host preemption, finding that the defendants could not be liable as a result their provision of alcohol to Elizabeth, it allowed plaintiffs to proceed under their common law claim of negligent care.
In this case, as On Stage points out, it would be “specious” to argue that plaintiffs’ complaints in this action are not related to alcohol. (Br. at 12) The same would be true as to Wakulich. Yet, the Court allowed the possibility of recovery under a common law theory separate from the question of the gift or sale of alcohol. Other courts have similarly allowed actions to proceed on independent common law grounds despite facts showing that the cases were alcohol related. See e.g. Harris v. Gower, Inc., 153 Ill. App. 3d 1035 (5th Dist. 1987) (complaint against tavern allowed based on its negligent care of plaintiff’s deceased after he lost consciousness from drink); Shortall v. Hawkeye’s Bar and Grill, 283 Ill. App.3d 439 (1st Dist. 1996) (summary judgment reversed as to tavern accused of exposing patrons to a third-party criminal attack in the form of a brawl outside its door); Quinn v. Sigma Rho Chapter of Beta Theta Pi Fraternity, 155 Ill. App. 3d 231 (4th Dist., 1987) (action allowed for injury resulting from alcohol related hazing incident); Haben v. Anderson, 232 Ill.App.3d 260 (3d Dist. 1992) (action allowed for death resulting from alcohol related hazing incident). This Court discussed Haben and Quinn in depth, without finding the decisions need to be overturned. Wakulich, 223 Ill.2d 239.
In Quinn, the appellate court found that an 18-year-old plaintiff, who was required to drink to the point of extreme intoxication and neurological damage in order to enter a fraternity, was entitled to sue the fraternity. Despite acknowledging the recognized rule of preemption as to social hosts and dram shops, the court allowed the action to proceed, and stated:
We agree with the case authorities holding that the furnishing of intoxicating beverages to underage persons, such as plaintiff, does not create a legal duty. We feel, however, that we are faced with a situation which consists of more than the mere furnishing of alcohol. The facts, as alleged in plaintiff’s amended complaint, describe a fraternity function where plaintiff was required to drink to intoxication in order to become a member of the fraternity. Even worse, according to the complaint, the alcohol content in plaintiff’s body was “at or near fatal levels.” We cannot close our eyes to the fact that the abuse illustrated in the present case could have resulted in the termination of life and that plaintiff was coerced into being his own executioner. Therefore, we hold that a legal duty was created and the complaint states a cause of action in negligence.
Id. at 237. (emphasis added)
In this case, while Homatas was not required to drink to the point of extreme intoxication, he was encouraged to do so, and then he was required to leave the club and drive away, and, thus, was coerced into being his friend’s executioner, as well as that of April and Addison Elizabeth Simmons. The court distinguished Quinn from social host and tavern cases preempting common law liability by noting the combination of the alleged requirement of extreme drinking along with the violation of an anti-hazing statute designed to protect human life. Here, the alleged facts show On Stage as part of its business plan encouraged extreme drinking beyond drunkenness, and then required violation of drunk driving laws designed to protect the lives of all motorists and their passengers.
In Haben, a hazing case involving death from acute intoxication, the court found that allegation of a “de facto” requirement for drinking was sufficient to satisfy the Quinn standard since “[i]f both the candidate for initiation and the persons performing the initiation believe that drinking is required, it makes little difference whether the requirement is informal or de facto.” Id. at 659. Here, under the allegations of the Simmons complaint, the club required Homatas and Chiariello to leave and brought Homatas’ car around. Interpreted in a manner most favorable to plaintiffs, these allegations show the club created the conditions under which a normal highly intoxicated person (or for that matter even a sober person) would believe he was required to drive away. Thus, the Simmons complaint alleges an improper requirement in violation of a public safety law at least as strongly as the allegation of a “de facto” requirement of extreme drinking in violation of anti-hazing law in Haben.
Unlike here, defendants in Wimmer v. Koenigseder, 108 Ill.2d 425 (1985), were taverns – a class of defendant to which Illinois courts have consistently applied preemption in cases alleging injury caused by drunken driving. More importantly, the plaintiff in Wimmer made no allegation that either of the two taverns directed the drunken driver responsible for the crash that killed plaintiff’s deceased to leave and drive away. On Stage frets that any tavern that tells its customers to leave at closing time will be subject to liability if this case goes forward. But that’s not the same as a striptease club ejecting a customer who is sick drunk, bringing around his car, helping him get in, and requiring him to drive away.
In Wienke v. Campaign County Grain Association, 113 Ill.App.3d 1005 (4th Dist. 1983), the employer played the role of social host in holding an event for its employees. Thus, the case falls under the preemption rule broadly mandated by this Court as to social hosts. Unlike in this case, no allegation was made in Wienke that the employer ordered or required the drunken driver to leave the function and drive away. To the extent that this Court, in retrospect, might determine that the “substantial assistance or encouragement” section of Restatement (Second) of Torts §876(b) would have or should have applied in Wienke or in Wimmer, ITLA respectfully requests the Court provide guidance on the matter. But even without §876(b), On Stage could properly be found liable by a jury under §876(a).
II. On Stage acted in concert with Homatas.
The Restatement of Torts provides as follows as to in-concert liability:
For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he
(a) does a tortious act in concert with the other or pursuant to a common design with him, or
(b) knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or
(c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.”
Restatement (Second) of Torts §876, at 315 (1979). (emphasis added)
As to clause (a), the Restatement comments:
Parties are acting in concert when they act in accordance with an agreement to cooperate in a particular line of conduct or to accomplish a particular result. The agreement need not be expressed in words and may be implied and understood to exist from the conduct itself. Whenever two or more persons commit tortious acts in concert, each becomes subject to liability for the acts of the others, as well as for his own acts. The theory of the early common law was that there was a mutual agency of each to act for the others, which made all liable for the tortious acts of any one.
Id. at Comment (a). (emphasis added)
A. On Stage may be held liable under §876(a) of the Restatement.
Here, the agreement was shown by action. On Stage directed Homatas to leave the club and drive away, and Homatas complied. Its direction and his obedience were both tortious as well as criminal acts since drunk driving is a crime under 625 ILCS 5/11-501, as well as being extremely dangerous. With the action prong of §876(a) fulfilled, no premeditated “common design” is necessary since that phrase follows the disjunctive word “or”. Of course, neither On Stage nor Homatas specifically intended to kill anybody. But intent to kill, maim or otherwise harm is not a requirement. In Scott v. Aldi, 301 Ill.App.3d 459 (1st Dist. 1998), the court allowed plaintiff’s conspiracy claim to proceed against a supermarket whose employee escorted the plaintiff from the store to an unlicensed taxi. The plaintiff, who suffered injury when the taxi crashed, alleged that Aldi, through its agents, entered into a conspiracy to operate an unlawful vehicle-for-hire. The court of appeals reversed the trial court’s dismissal of the conspiracy count, finding that the operation not only was illegal but was tortious conduct, given the public safety purpose of the statute requiring cabs to be licensed. Id. at 529. In Scott, the plaintiff, of course, made no allegation that defendants intended that she be injured. Such intent is rare. Even in the case of Woods v. Cole, 181 Ill.2d 512 (Ill. 1998), the defendant was only accused of negligently loading a firearm and encouraging another to pull the trigger for the purpose of scaring plaintiff’s deceased, not for the purpose of killing him. If intent to maim or kill were a requirement, few, if any, of the §876(a) cases allowed to go to trial would have survived a motion to dismiss.
Here, similar to Scott, plaintiffs allege that On Stage engaged in a tortious course of conduct by requiring Homatas to leave the club and drive away from the club drunk. As in Scott, the law that On Stage and Homatas violated as to Homatas’ drunk driving was a public safety statute. As in Scott, their alleged, in-concert violation of the statute is actionable. Requiring someone to commit a crime is itself actionable. See Lambert v. Lake Forest, 186 Ill. App. 3d 937, 944 (2d Dist. 1989).
B. On Stage may be held liable under §876(b) of the Restatement.
On Stage also substantially encouraged Homatas’ tortious behavior in accord with its premeditated business plan to encourage customer drinking to the point of extreme intoxication and sickness. Under the allegations, On Stage opted to be a full nudity club for the purpose of avoiding the requirements imposed by the Dramshop Act. That way its servers would not have to undergo the training that would help them spot and curb excessive drinking. That way, the alcohol would flow freely – only hard liquor allowed – and customers would tip the dancers more and buy more mixers, all to the profit of the club. On Stage’s plan to substantially encourage excessive drinking, and the inevitable illegal driving that followed, was carried out during Homatas’ and Chiariello’s two-hour stint of drinking and ordering dancers to come to their table. Under the allegations of the Simmons complaint, its substantial encouragement continued after the club ejected Homatas and his friend, brought Homatas’ vehicle, opened the door and allowed him to drive away. In doing this, the club was not operating as a licensed tavern. Nor was it playing the role of social host. Rather, On Stage was engaging in its for-profit business in a manner that reflected its wanton disregard of human life.
In its comment regarding in-concert conduct as substantial assistance or encouragement, the Restatement states:
Advice or encouragement to act operates as a moral support to a tortfeasor and if the act encouraged is known to be tortious it has the same effect upon the liability of the adviser as participation or physical assistance. If the encouragement or assistance is a substantial factor in causing the resulting tort, the one giving it is himself a tortfeasor and is responsible for the consequences of the other’s act.
Comment b, Restatement (Second) Torts §876(b). Under plaintiffs’ allegations, the club knew that Homatas was extremely intoxicated, and should not be driving. The drive itself was a tortious act. The drive itself foreseeably led to the tragedy that followed. Whether the club ordered Homatas to drive away or simply ordered him out, brought his car around, opened the door and allowed him to leave, the club substantially encouraged Homatas’ tortious conduct, and, thus, can be held liable under part (b) of the Restatement (Second) of Torts §876. Because the club was neither giving away nor selling liquor, the preemption cases on which On Stage relies simply do not apply.
Nor does it matter that the club itself was not present at the scene when the predictable crash occurred. In Clausen v. Carroll, 291 Ill.App.3d 530 (2d Dist. 1997), the court determined that the substantial encouragement given by the defendant, a participant in drag racing, made the defendant Ryan Chapman subject to liability under §876. The drag race itself was the tortious conduct. It did not matter that Chapman was not involved in the subsequent crash. The court explained:
We believe that a drag race is a joint venture where all participants have encouraged one another to engage in reckless conduct. …
A review of the record in the instant case demonstrates the existence of facts from which a jury could reasonably conclude that, at the time of the collision, Chapman and Carroll were engaged in a joint concerted tortious activity. …
Furthermore, even if the collision did not occur while Chapman and Carroll were actually engaged in the alleged race, there is evidence from which a jury could conclude that the collision was a natural or foreseeable result of the alleged race.
Id. at 539-540.
The court in Clausen noted that its decision was a logical extension of Sanke v. Bechina, 216 Ill.App.3d 962 (2nd Dist. 1991), where a passenger in the car through comments and gestures had substantially encouraged the driver’s reckless driving. In Sanke, the court stated that
a person other than the driver is not held liable for damages caused by negligent acts of the driver unless that person is the owner of the vehicle or has the right to control that vehicle … However, plaintiffs in this case are not asserting Bechina had a duty to control Schwartz in order to prevent him from driving in a reckless manner. Instead they assert Bechina himself is a contributing tort-feasor.
Id. at 963-964. The court agreed, finding that plaintiffs had stated a viable claim with respect to the passenger’s own alleged wrongful acts, and that “[t]he determination of whether Bechina’s conduct constituted ‘substantial encouragement’ is a question of fact for the jury.” Id. at 972. Here, too, plaintiffs state a viable claim in alleging the club’s wrongful and substantial encouragement of drunken driving, and the question of whether the club’s conduct constituted such substantial encouragement or otherwise constituted participation in the tortious crime of drunk driving is one for the jury.
The situation here is readily distinguishable from that of Umble v. McKie and Sons, 294 Ill.App.3d 449 (2nd Dist. 1998). In that case, the repair shop simply fixed the driver’s car and returned the keys to him as it was required to do or face the possibility of a conversion action. Unlike here, the repair shop did not substantially encourage the driver to drink any alcohol, much less to drink to the point of extreme intoxication and sickness. Nor did the repair shop require the driver to leave and to drive away. As the court noted, “The complaint contains no allegation that any of defendant’s employees actively encouraged Butzen to get back in his car and drive. We do not equate failing to prevent certain conduct from actively encouraging that conduct.” Id. at 451-452. In contrast, here, under both the Chiariello and Simmon complaints, On Stage actively and substantially encouraged Homatas to drink to extreme excess and to drive away drunk. Under the allegations, On Stage did not have to undertake any “problematic” determination to figure out whether Homatas was drunk. After all, On Stage ejected him because he was so sick from intoxication that he vomited in its bathroom. On Stage acted in an attempt to rid itself of the problem posed by a drunken customer – a problem it played a significant and premeditated role in creating. The alleged participatory acts of On Stage were inherently wanton and wrongful; not so with the alleged acts of the repair shop in the Umble case. That makes all the difference.
- III. On Stage’s actions proximately caused the deaths at issue.
In Claussen, 291 Ill.App.3d at 540, the court found that the crash that injured the plaintiff was “was a natural or foreseeable result of the alleged race” and, thus, that Chapman’s involvement in the prior drag race was a proximate cause of plaintiff’s injuries, even though Chapman was not driving a vehicle involved in the crash. His substantial encouragement of the tortious activity was enough to find legal causation.
The same is true here. As the appellate court noted, On Stage doesn’t challenge the existence of the cause-in-fact prong of proximate cause that ‘but for’ its actions the crash would not have occurred. Nothing in the pleadings indicates that Homatas wished to leave the club or would have been able to get into his car without assistance at the time that On Stage ejected him and his friend Chiariello, and helped Homatas get behind the wheel. As to legal cause, as a matter of common sense, the appellate court was right in concluding that “not only was the action foreseeable, but in this case it was nearly predictable.” Simmons, supra, 368 Ill.App.3d at 1009. It was the club’s substantial assistance in encouraging Homatas to become drunk to the point of sickness and then in requiring him to leave and drive away – and not the provision of alcohol – that served as a proximate cause of the crash. Id.
In fact, On Stage itself didn’t even provide the hard liquor that Homatas and his friend drank, so the preemption-based cases cited by defendant that ascribe proximate cause solely to the person who imbibes and not to the bar that sells or the host who gives away alcohol cannot determine the issue. While it might normally seem, aside from the preemption rule, that the provider of alcohol would, if anything, be arguably more responsible for proximately causing a drunken driving crash, On Stage’s business plan was predicated on an ironic paradox: because it could not serve liquor, it could encourage excessive drinking with abandon. But its plan turns on a wooden adherence to preemption, and disregard of common law, contrary to the teachings of Wakulich. Under the allegations in this case, the club encouraged and required Homatas to commit the tortious crime of drunk driving, and, thus, the club must share in the blame for proximately causing the ensuing, predictable crash.
Defendant’s argument that it can’t be held liable because Homata’s criminal act of driving drunk broke the chain of causation makes no sense given that the club directed that criminal act. After all, even a defendant’s mere negligence enabling the commission of a criminal act by a third party may suffice to support a finding of proximate cause and liability. Thus a taxi company whose driver left his cab running with the key in its ignition contrary to statute could be sued despite defendant’s objection that a thief’s act of stealing the cab before crashing it broke the chain of causation. The question of proximate cause was for the jury to decide. Ney v. Yellow Cab, 2 Ill.2d 74, 84 (1954). In this case, the issue of causation is simpler since On Stage required Homatas to violate the law and drive while he was extremely intoxicated. The cabbie in Ney enabled the thief, while On Stage both enabled and ordered Homatas’ violation of the law.
- IV. Simmons’ lack of a “special relationship” with On Stage makes no difference.
Only section (c) of §876 requires breach of duty to a third person. By implication, no such breach of a direct duty owed by the in-concert tortfeasor need be established to adequately allege the tortfeasor’s liability under (a) and (b) which, as discussed above, apply here.
Brewster v. Rush-Presbyterian-St. Luke’s Med. Ctr., 361 Ill.App.3d 32 (1st Dist. 2005), does not meet the criteria of §876(a) because the hospital was not acting tortiously in concert with anyone in simply requiring its resident to work a 36-hour shift. On Stage’s claim that the case would have been no different had the hospital known the resident was driving and told her to go home and get some rest is mere speculation since no such facts were alleged. Nor does Brewster meet the criteria of §876(b) because no evidence indicated that the resident’s staying up to work long hours constituted a breach of any duty. In fact, the case did not address in-concert liability at all. Brewster did find that there was no private right of action under the duty hour requirements for residents under the Hospital Licensing Act because the act was enacted to protect hospital patients, not the public in general. Here, in contrast, the law against drunk driving is designed to protect the traveling public – a class that included both Chiariello and the Simmonses.
Defendant also relies upon Iseberg v. Gross,227 Ill.2d 78 (2007), for its no-special-duty argument. In that case, two business partners of the claimant learned of threats by a former business partner to harm him. After he was shot and wounded, Mitchell Iseberg sued the two partners for not warning him or informing the police of the threats. The Court concluded that the defendants had no duty to do so without a special relationship with Iseberg that would have required such a warning. In so holding, the Court distinguished Iseberg from cases where, as here, the defendant was alleged to have engaged in some “negligent affirmative conduct”. Id. at 97. In Bajwa v. Metropolitan Life Insurance Co., 208 Ill. 2d 414 (2004), for instance, the Court allowed a wrongful death action by the estate of an individual who was murdered by the beneficiary of a life insurance policy who took out the policy, unknown to the insured, in the insured’s name. Under the alleged facts, the insurer’s agent was affirmatively negligent in falsely representing on the policy application that he had witnessed the signature of the proposed insured.
Under the alleged facts of this case, On Stage was affirmatively negligent in first encouraging Homatas to drink liquor to the point of extreme intoxication, and then in encouraging and requiring him to drive away drunk. In these circumstances, as in Bajwa, On Stage itself was affirmatively negligent, so no special relationship need be established between it and the Simmonses for them to have a viable claim against the striptease club.
On Stage separately relies on social host cases in arguing that a special relationship must be established. But those cases are readily distinguishable since, as discussed, preemption applied, making causation a moot issue. The same distinction applies to the tavern and social host cases defendant cites in claiming that Illinois courts have held that imputing a duty under the circumstances presented here is improper. (Br. at 30, et seq.) Under the extraordinary facts alleged by plaintiffs, the finding of duty is appropriate. Not only were the resulting deaths entirely foreseeable, indeed predictable, but considerations of public policy favor imposing a duty. On Stage allegedly followed a clever business plan where the booze flowed freely at the encouragement of its servers, where the dance girls got big tips, and where the club shared in the substantial profits. Under its plan, On Stage created the wild, wild Midwest in West Chicago. It encouraged its customers to live it up – live it up at the expense of the deaths John Chiariello, April and Addison Elizabeth Simmons, and untold others who were killed or maimed as a result. Considerations of public policy and fairness, as well as common law principles set forth in the Restatement (Second) of Torts §876, cry out for imposing the rule of law to rein in this defendant.
CONCLUSION
WHEREFORE, the Illinois Trial Lawyers Association asks that the Court affirm the trial court’s and appellate court’s denial of defendant’s motion to dismiss as to all plaintiffs, without regard to plaintiff John A. Chiariello’s status as a customer of On Stage’s striptease club.
Respectfully submitted,
Illinois Trial Lawyers Association
By: William Lazarus
Certificate of Compliance
I, William Lazarus, an attorney, certify that this brief conforms to the requirements of Supreme Court Rules 341(a) and (b). The length of this brief, excluding the Rule 341(h)(1) statement of points and authorities, this Rule 341(c) certificate of compliance, and the certificate of service is 19 pages.
___________________________________
William Lazarus
Certificate of Service
I, William Lazarus, an attorney, certify that I caused copies of the foregoing amicus brief to be served upon the persons listed below by mailing, first class postage prepaid, by placing a copy of the brief in a U.S. Postal Service mail receptacle located at the post office at 1921 Ridge Road in Homewood, Illinois 60430 before 4 p.m. on October 5, 2009.
___________________________________
William Lazarus
Matthew G. Burke
Heineke & Burke, LLC
2 North LaSalle Street
Suite 1110
Chicago, Illinois 60602
Craig S. Mielke
Foote, Meyers, Mielke & Flowers, LLC
28 N. First Street, Suite 2
Geneva, Illinois 60134
Robert L. Speers
Timothy J. Reuland
Julie L. Cibulskis
Speers, Reuland & Cibulskis, p.c.
54 West Downer Place
Aurora, Illinois 60506
[1] Without citing anything in the record in this case, because no such record exists, On Stage claims that Homatas was driving under the influence of cocaine as well as alcohol. (Br. 47) Defendant does not state whether one of its agents or someone else supplied the illicit drug to Homatas before it directed him to drive away. In any event, alleged facts outside the record are not appropriately before this Court.
High court rejects immunity claim
Overview
On Stage Productions, Inc. banks on its own lawlessness in arguing that its wanton behavior is immune from the rule of law. While suggesting that plaintiffs may sue the store that sold the bottles of Captain Morgan rum and Grey Goose vodka that John D. Homatas and John D. Chiariello brought into its Diamonds Gentlemen’s Club on January 4, 2006 (Br. 16), On Stage asserts that because it did not have a license to sell liquor, it cannot be held responsible for encouraging Homatas and Chiariello to drink beyond drunkenness, its ensuing ejection of the men from the club, and its direction that Homatas drive away with his friend sitting beside him. Homatas became persona non grata after he became so sick from drink that he vomited in the club’s bathroom. Rather than deal with more unpleasantness or even take the time to order a taxi, On Stage opted to require Homatas to break the law and drive away drunk, to the grave endangerment of the driving public, and resulting in the deaths of Chiariello, April Simmons and her 8.5-month old daughter in utero, Addison Elizabeth.
Challenging the appellate court’s determination that it may be held liable for its in-concert activity under principles set forth in §876 of the RESTATEMENT (SECOND) OF TORTS, On Stage bluntly asserts, “The allegations that On Stage brought Homatas’s car to him, opened said door, and directed him to leave cannot be deemed ‘substantial assistance’.” (Br. 46) Plaintiffs’ complaints, however, do not state or suggest that Homatas wanted to leave the club or would have been able to find or even get into his car without the assistance of the club’s valet. Homatas’ illegal drive, and the ensuing tragedy, would not have occurred without the club’s encouragement, under the facts of the complaints viewed in the light most favorable to the plaintiffs. Even if On Stage’s actions were not deemed to constitute substantial assistance or encouragement under RESTATEMENT §876(b), the club would still be liable under §876(a) for its tortious act done in-concert with Homatas. The club ordered Homatas to leave the club and drive away in violation of the law, and Homatas obeyed. The resulting loss of life was utterly foreseeable, which is why drunk driving is a crime.
On Stage seeks to avoid responsibility for its actions with a sweeping argument that would elevate dicta into inexorable and unchallengeable legal principle and warp the concept of probable cause beyond the bounds of precedent, reason and common sense. It also seeks to avoid responsibility by predicting a parade of horribles if this Court upholds the trial and appellate court decisions below. However, under the narrow facts and extraordinarily egregious circumstances of this case, declining defendant’s motion to dismiss will not lead to sweeping and unpredictable changes contrary to prior holdings of this Court. This case does not involve a licensed purveyor of liquor. Nor does it involve a social host. Licensed taverns will continue to enjoy the protections, along with shouldering the burdens, imposed by the Dramshop Act. Social hosts will continue to be afforded the same immunities they have enjoyed thus far.
On Stage allegedly operated its striptease club without a liquor license as a premeditated way of avoiding responsibility and maximizing profits to the grave expense of the traveling public. On Stage then ordered (the Chiariello complaint) or effectively required (the Simmons complaint) its extremely intoxicated customer to break the law and drive away. At this stage, all the plaintiffs’ allegations must be taken as true and considered in the light most favorable to them. Jarvis v. S. Oak Dodge, 201 Ill. 2d 81, 86 (Ill. 2002). Allowing On Stage to be held accountable for its wrongful actions does not result in any departure, much less a radical departure, from the rule of law. To the contrary, it enables application of well established common law principles to restrain lawless behavior that threatened life and led to death.
The factual allegations of both the Homatas and the Simmons complaints amount to allegations of substantial assistance or encouragement sufficient to support liability under the principles stated in the RESTATEMENT (SECOND) OF TORTS §876(b). They also support allowing a jury to find liability under §876(a) since On Stage directed Homatas to commit a crime in ordering him to leave the club and drive away when he was intoxicated. In ordering violation of the law against driving while intoxicated, On Stage became a participant in the crime. The excuse, “I was only following orders” does not justify commission of a crime and insulate the actor from liability for the resulting injury. The assertion, “I was only giving the orders” cannot excuse the person who directs the crime. See Lambert v. Lake Forest, 186 Ill. App. 3d 937, 944 (2nd Dist. 1989) Thus, under the explicit allegations of the Chiariello complaint, On Stage may be held liable for its in-concert action under §876(a) of the RESTATEMENT as well as under §876(b). So, too, with the Simmons complaint. In addition to detailing substantial assistance or encouragement, the Simmons allegations that On Stage required Homatas and Chiariello to leave the club, brought around Homatas’ vehicle, and allowed Homatas to drive away are tantamount to a requirement that he commit the crime of drunk driving, given the totality of the circumstances viewed in the light most favorable to plaintiffs.
The appellate court aptly details the allegations of the plaintiffs. Simmons v. On Stage Productions, Inc., 386 Ill.App.3d 998, 999-1001 (2d Dist. 2008). The Illinois Trial Lawyers Association adopts those allegations, including the court’s conclusion that On Stage allegedly required that Homatas drive away while he was extremely intoxicated.
ARGUMENT
I. On Stage overstates preemption.
On Stage quotes no language in the Illinois Dram Shop Act, Liquor Control Act or any other law to show any legislative intent to preempt the plaintiffs’ common law action against it. Rather, it argues that Illinois courts long have “consistently ruled that the field of alcohol related liability is preempted by legislation and have consistently refused to recognize any cause of action for alcohol related liability beyond those explicitly provided for by the General Assembly.” (Br. at 4.) While On Stage invokes dicta in Wakulich v. Mraz 203 Ill.2d 223 (2003), and other cases to support its claim, the holding in Wakulich itself shows the sweeping dicta does not reflect the reality, but is restricted to cases involving taverns and social hosts selling or giving away alcohol, and even then the dicta is overbroad. In this case, On Stage neither sold nor gave away alcohol, so its claim of absolute preemption is not well founded. Most importantly, On Stage’s liability independently arises under the common law as a result of its in-concert acts in assisting, encouraging, and directing Homatas’ drunk driving.
On Stage correctly comments that this case is alcohol related. So was Wakulich, where plaintiffs alleged that defendants had induced Elizabeth Wakulich to drink herself into a coma, and then voluntarily undertook to care for her in a negligent fashion, resulting in her death. While the Court held to social host preemption, finding that the defendants could not be liable as a result their provision of alcohol to Elizabeth, it allowed plaintiffs to proceed under their common law claim of negligent care.
In this case, as On Stage points out, it would be “specious” to argue that plaintiffs’ complaints in this action are not related to alcohol. (Br. at 12) The same would be true as to Wakulich. Yet, the Court allowed the possibility of recovery under a common law theory separate from the question of the gift or sale of alcohol. Other courts have similarly allowed actions to proceed on independent common law grounds despite facts showing that the cases were alcohol related. See e.g. Harris v. Gower, Inc., 153 Ill. App. 3d 1035 (5th Dist. 1987) (complaint against tavern allowed based on its negligent care of plaintiff’s deceased after he lost consciousness from drink); Shortall v. Hawkeye’s Bar and Grill, 283 Ill. App.3d 439 (1st Dist. 1996) (summary judgment reversed as to tavern accused of exposing patrons to a third-party criminal attack in the form of a brawl outside its door); Quinn v. Sigma Rho Chapter of Beta Theta Pi Fraternity, 155 Ill. App. 3d 231 (4th Dist., 1987) (action allowed for injury resulting from alcohol related hazing incident); Haben v. Anderson, 232 Ill.App.3d 260 (3d Dist. 1992) (action allowed for death resulting from alcohol related hazing incident). This Court discussed Haben and Quinn in depth, without finding the decisions need to be overturned. Wakulich, 223 Ill.2d 239.
In Quinn, the appellate court found that an 18-year-old plaintiff, who was required to drink to the point of extreme intoxication and neurological damage in order to enter a fraternity, was entitled to sue the fraternity. Despite acknowledging the recognized rule of preemption as to social hosts and dram shops, the court allowed the action to proceed, and stated:
We agree with the case authorities holding that the furnishing of intoxicating beverages to underage persons, such as plaintiff, does not create a legal duty. We feel, however, that we are faced with a situation which consists of more than the mere furnishing of alcohol. The facts, as alleged in plaintiff’s amended complaint, describe a fraternity function where plaintiff was required to drink to intoxication in order to become a member of the fraternity. Even worse, according to the complaint, the alcohol content in plaintiff’s body was “at or near fatal levels.” We cannot close our eyes to the fact that the abuse illustrated in the present case could have resulted in the termination of life and that plaintiff was coerced into being his own executioner. Therefore, we hold that a legal duty was created and the complaint states a cause of action in negligence.
Id. at 237. (emphasis added)
In this case, while Homatas was not required to drink to the point of extreme intoxication, he was encouraged to do so, and then he was required to leave the club and drive away, and, thus, was coerced into being his friend’s executioner, as well as that of April and Addison Elizabeth Simmons. The court distinguished Quinn from social host and tavern cases preempting common law liability by noting the combination of the alleged requirement of extreme drinking along with the violation of an anti-hazing statute designed to protect human life. Here, the alleged facts show On Stage as part of its business plan encouraged extreme drinking beyond drunkenness, and then required violation of drunk driving laws designed to protect the lives of all motorists and their passengers.
In Haben, a hazing case involving death from acute intoxication, the court found that allegation of a “de facto” requirement for drinking was sufficient to satisfy the Quinn standard since “[i]f both the candidate for initiation and the persons performing the initiation believe that drinking is required, it makes little difference whether the requirement is informal or de facto.” Id. at 659. Here, under the allegations of the Simmons complaint, the club required Homatas and Chiariello to leave and brought Homatas’ car around. Interpreted in a manner most favorable to plaintiffs, these allegations show the club created the conditions under which a normal highly intoxicated person (or for that matter even a sober person) would believe he was required to drive away.
Thus, the Simmons complaint alleges an improper requirement in violation of a public safety law at least as strongly as the allegation of a “de facto” requirement of extreme drinking in violation of anti-hazing law in Haben.
Unlike here, defendants in Wimmer v. Koenigseder, 108 Ill.2d 425 (1985), were taverns – a class of defendant to which Illinois courts have consistently applied preemption in cases alleging injury caused by drunken driving. More importantly, the plaintiff in Wimmer made no allegation that either of the two taverns directed the drunken driver responsible for the crash that killed plaintiff’s deceased to leave and drive away. On Stage frets that any tavern that tells its customers to leave at closing time will be subject to liability if this case goes forward. But that’s not the same as a striptease club ejecting a customer who is sick drunk, bringing around his car, helping him get in, and requiring him to drive away.
In Wienke v. Campaign County Grain Association, 113 Ill.App.3d 1005 (4th Dist. 1983), the employer played the role of social host in holding an event for its employees. Thus, the case falls under the preemption rule broadly mandated by this Court as to social hosts. Unlike in this case, no allegation was made in Wienke that the employer ordered or required the drunken driver to leave the function and drive away. To the extent that this Court, in retrospect, might determine that the “substantial assistance or encouragement” section of RESTATEMENT (SECOND) OF TORTS §876(b) would have or should have applied in Wienke or in Wimmer, ITLA respectfully requests the Court provide guidance on the matter. But even without §876(b), On Stage could properly be found liable by a jury under §876(a).
II. On Stage acted in concert with Homatas.
The RESTATEMENT OF TORTS provides as follows as to in-concert liability:
For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he
(a) does a tortious act in concert with the other or pursuant to a common design with him, or
(b) knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or
(c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.”
RESTATEMENT (SECOND) OF TORTS §876, at 315 (1979). (emphasis added)
As to clause (a), the RESTATEMENT comments:
Parties are acting in concert when they act in accordance with an agreement to cooperate in a particular line of conduct or to accomplish a particular result. The agreement need not be expressed in words and may be implied and understood to exist from the conduct itself. Whenever two or more persons commit tortious acts in concert, each becomes subject to liability for the acts of the others, as well as for his own acts. The theory of the early common law was that there was a mutual agency of each to act for the others, which made all liable for the tortious acts of any one.
Id. at Comment (a). (emphasis added)
A. On Stage may be held liable under §876(a) of the RESTATEMENT.
Here, the agreement was shown by action. On Stage directed Homatas to leave the club and drive away, and Homatas complied. Its direction and his obedience were both tortious as well as criminal acts since drunk driving is a crime under 625 ILCS 5/11-501, as well as being extremely dangerous. With the action prong of §876(a) fulfilled, no premeditated “common design” is necessary since that phrase follows the disjunctive word “or”. Of course, neither On Stage nor Homatas specifically intended to kill anybody. But intent to kill, maim or otherwise harm is not a requirement. In Scott v. Aldi, 301 Ill.App.3d 459 (1st Dist. 1998), the court allowed plaintiff’s conspiracy claim to proceed against a supermarket whose employee escorted the plaintiff from the store to an unlicensed taxi. The plaintiff, who suffered injury when the taxi crashed, alleged that Aldi, through its agents, entered into a conspiracy to operate an unlawful vehicle-for-hire. The court of appeals reversed the trial court’s dismissal of the conspiracy count, finding that the operation not only was illegal but was tortious conduct, given the public safety purpose of the statute requiring cabs to be licensed. Id. at 529. In Scott, the plaintiff, of course, made no allegation that defendants intended that she be injured.
Such intent is rare. Even in the case of Woods v. Cole, 181 Ill.2d 512 (Ill. 1998), the defendant was only accused of negligently loading a firearm and encouraging another to pull the trigger for the purpose of scaring plaintiff’s deceased, not for the purpose of killing him. If intent to maim or kill were a requirement, few, if any, of the §876(a) cases allowed to go to trial would have survived a motion to dismiss.
Here, similar to Scott, plaintiffs allege that On Stage engaged in a tortious course of conduct by requiring Homatas to leave the club and drive away from the club drunk. As in Scott, the law that On Stage and Homatas violated as to Homatas’ drunk driving was a public safety statute. As in Scott, their alleged, in-concert violation of the statute is actionable. Requiring someone to commit a crime is itself actionable. See Lambert v. Lake Forest, 186 Ill. App. 3d 937, 944 (2d Dist. 1989).
B. On Stage may be held liable under §876(b) of the RESTATEMENT.
On Stage also substantially encouraged Homatas’ tortious behavior in accord with its premeditated business plan to encourage customer drinking to the point of extreme intoxication and sickness. Under the allegations, On Stage opted to be a full nudity club for the purpose of avoiding the requirements imposed by the Dramshop Act. That way its servers would not have to undergo the training that would help them spot and curb excessive drinking. That way, the alcohol would flow freely – only hard liquor allowed – and customers would tip the dancers more and buy more mixers, all to the profit of the club. On Stage’s plan to substantially encourage excessive drinking, and the inevitable illegal driving that followed, was carried out during Homatas’ and Chiariello’s two-hour stint of drinking and ordering dancers to come to their table. Under the allegations of the Simmons complaint, its substantial encouragement continued after the club ejected Homatas and his friend, brought Homatas’ vehicle, opened the door and allowed him to drive away. In doing this, the club was not operating as a licensed tavern. Nor was it playing the role of social host. Rather, On Stage was engaging in its for-profit business in a manner that reflected its wanton disregard of human life.
In its comment regarding in-concert conduct as substantial assistance or encouragement, the RESTATEMENT states:
Advice or encouragement to act operates as a moral support to a tortfeasor and if the act encouraged is known to be tortious it has the same effect upon the liability of the adviser as participation or physical assistance. If the encouragement or assistance is a substantial factor in causing the resulting tort, the one giving it is himself a tortfeasor and is responsible for the consequences of the other’s act.
Comment b, RESTATEMENT (SECOND) TORTS §876(b). Under plaintiffs’ allegations, the club knew that Homatas was extremely intoxicated, and should not be driving. The drive itself was a tortious act. The drive itself foreseeably led to the tragedy that followed. Whether the club ordered Homatas to drive away or simply ordered him out, brought his car around, opened the door and allowed him to leave, the club substantially encouraged Homatas’ tortious conduct, and, thus, can be held liable under part (b) of the RESTATEMENT (SECOND) OF TORTS §876. Because the club was neither giving away nor selling liquor, the preemption cases on which On Stage relies simply do not apply.
Nor does it matter that the club itself was not present at the scene when the predictable crash occurred. In Clausen v. Carroll, 291 Ill.App.3d 530 (2d Dist. 1997), the court determined that the substantial encouragement given by the defendant, a participant in drag racing, made the defendant Ryan Chapman subject to liability under §876. The drag race itself was the tortious conduct. It did not matter that Chapman was not involved in the subsequent crash.
The court explained:
We believe that a drag race is a joint venture where all participants have encouraged one another to engage in reckless conduct. …
A review of the record in the instant case demonstrates the existence of facts from which a jury could reasonably conclude that, at the time of the collision, Chapman and Carroll were engaged in a joint concerted tortious activity. …
Furthermore, even if the collision did not occur while Chapman and Carroll were actually engaged in the alleged race, there is evidence from which a jury could conclude that the collision was a natural or foreseeable result of the alleged race.
Id. at 539-540.
The court in Clausen noted that its decision was a logical extension of Sanke v. Bechina, 216 Ill.App.3d 962 (2nd Dist. 1991), where a passenger in the car through comments and gestures had substantially encouraged the driver’s reckless driving. In Sanke, the court stated that
a person other than the driver is not held liable for damages caused by negligent acts of the driver unless that person is the owner of the vehicle or has the right to control that vehicle … However, plaintiffs in this case are not asserting Bechina had a duty to control Schwartz in order to prevent him from driving in a reckless manner. Instead they assert Bechina himself is a contributing tort-feasor.
Id. at 963-964. The court agreed, finding that plaintiffs had stated a viable claim with respect to the passenger’s own alleged wrongful acts, and that “[t]he determination of whether Bechina’s conduct constituted ‘substantial encouragement’ is a question of fact for the jury.” Id. at 972. Here, too, plaintiffs state a viable claim in alleging the club’s wrongful and substantial encouragement of drunken driving, and the question of whether the club’s conduct constituted such substantial encouragement or otherwise constituted participation in the tortious crime of drunk driving is one for the jury.
The situation here is readily distinguishable from that of Umble v. McKie and Sons, 294 Ill.App.3d 449 (2nd Dist. 1998). In that case, the repair shop simply fixed the driver’s car and returned the keys to him as it was required to do or face the possibility of a conversion action. Unlike here, the repair shop did not substantially encourage the driver to drink any alcohol, much less to drink to the point of extreme intoxication and sickness. Nor did the repair shop require the driver to leave and to drive away. As the court noted, “The complaint contains no allegation that any of defendant’s employees actively encouraged Butzen to get back in his car and drive. We do not equate failing to prevent certain conduct from actively encouraging that conduct.” Id. at 451-452. In contrast, here, under both the Chiariello and Simmon complaints, On Stage actively and substantially encouraged Homatas to drink to extreme excess and to drive away drunk. Under the allegations, On Stage did not have to undertake any “problematic” determination to figure out whether Homatas was drunk. After all, On Stage ejected him because he was so sick from intoxication that he vomited in its bathroom. On Stage acted in an attempt to rid itself of the problem posed by a drunken customer – a problem it played a significant and premeditated role in creating. The alleged participatory acts of On Stage were inherently wanton and wrongful; not so with the alleged acts of the repair shop in the Umble case. That makes all the difference.
III. On Stage’s actions proximately caused the deaths at issue.
In Claussen, 291 Ill.App.3d at 540, the court found that the crash that injured the plaintiff was “was a natural or foreseeable result of the alleged race” and, thus, that Chapman’s involvement in the prior drag race was a proximate cause of plaintiff’s injuries, even though Chapman was not driving a vehicle involved in the crash. His substantial encouragement of the tortious activity was enough to find legal causation.
The same is true here. As the appellate court noted, On Stage doesn’t challenge the existence of the cause-in-fact prong of proximate cause that ‘but for’ its actions the crash would not have occurred. Nothing in the pleadings indicates that Homatas wished to leave the club or would have been able to get into his car without assistance at the time that On Stage ejected him and his friend Chiariello, and helped Homatas get behind the wheel. As to legal cause, as a matter of common sense, the appellate court was right in concluding that “not only was the action foreseeable, but in this case it was nearly predictable.” Simmons, supra, 368 Ill.App.3d at 1009. It was the club’s substantial assistance in encouraging Homatas to become drunk to the point of sickness and then in requiring him to leave and drive away – and not the provision of alcohol – that served as a proximate cause of the crash. Id.
In fact, On Stage itself didn’t even provide the hard liquor that Homatas and his friend drank, so the preemption-based cases cited by defendant that ascribe proximate cause solely to the person who imbibes and not to the bar that sells or the host who gives away alcohol cannot determine the issue. While it might normally seem, aside from the preemption rule, that the provider of alcohol would, if anything, be arguably more responsible for proximately causing a drunken driving crash, On Stage’s business plan was predicated on an ironic paradox: because it could not serve liquor, it could encourage excessive drinking with abandon. But its plan turns on a wooden adherence to preemption, and disregard of common law, contrary to the teachings of Wakulich. Under the allegations in this case, the club encouraged and required Homatas to commit the tortious crime of drunk driving, and, thus, the club must share in the blame for proximately causing the ensuing, predictable crash.
Defendant’s argument that it can’t be held liable because Homata’s criminal act of driving drunk broke the chain of causation makes no sense given that the club directed that criminal act. After all, even a defendant’s mere negligence enabling the commission of a criminal act by a third party may suffice to support a finding of proximate cause and liability. Thus a taxi company whose driver left his cab running with the key in its ignition contrary to statute could be sued despite defendant’s objection that a thief’s act of stealing the cab before crashing it broke the chain of causation. The question of proximate cause was for the jury to decide. Ney v. Yellow Cab, 2 Ill.2d 74, 84 (1954). In this case, the issue of causation is simpler since On Stage required Homatas to violate the law and drive while he was extremely intoxicated. The cabbie in Ney enabled the thief, while On Stage both enabled and ordered Homatas’ violation of the law.
IV. Simmons’ lack of a “special relationship” with On Stage makes no difference.
Only section (c) of §876 requires breach of duty to a third person. By implication, no such breach of a direct duty owed by the in-concert tortfeasor need be established to adequately allege the tortfeasor’s liability under (a) and (b) which, as discussed above, apply here.
Brewster v. Rush-Presbyterian-St. Luke’s Med. Ctr., 361 Ill.App.3d 32 (1st Dist. 2005), does not meet the criteria of §876(a) because the hospital was not acting tortiously in concert with anyone in simply requiring its resident to work a 36-hour shift. On Stage’s claim that the case would have been no different had the hospital known the resident was driving and told her to go home and get some rest is mere speculation since no such facts were alleged. Nor does Brewster meet the criteria of §876(b) because no evidence indicated that the resident’s staying up to work long hours constituted a breach of any duty. In fact, the case did not address in-concert liability at all. Brewster did find that there was no private right of action under the duty hour requirements for residents under the Hospital Licensing Act because the act was enacted to protect hospital patients, not the public in general. Here, in contrast, the law against drunk driving is designed to protect the traveling public – a class that included both Chiariello and the Simmonses.
Defendant also relies upon Iseberg v. Gross,227 Ill.2d 78 (2007), for its no-special-duty argument. In that case, two business partners of the claimant learned of threats by a former business partner to harm him. After he was shot and wounded, Mitchell Iseberg sued the two partners for not warning him or informing the police of the threats. The Court concluded that the defendants had no duty to do so without a special relationship with Iseberg that would have required such a warning. In so holding, the Court distinguished Iseberg from cases where, as here, the defendant was alleged to have engaged in some “negligent affirmative conduct”. Id. at 97. In Bajwa v. Metropolitan Life Insurance Co., 208 Ill. 2d 414 (2004), for instance, the Court allowed a wrongful death action by the estate of an individual who was murdered by the beneficiary of a life insurance policy who took out the policy, unknown to the insured, in the insured’s name. Under the alleged facts, the insurer’s agent was affirmatively negligent in falsely representing on the policy application that he had witnessed the signature of the proposed insured.
Under the alleged facts of this case, On Stage was affirmatively negligent in first encouraging Homatas to drink liquor to the point of extreme intoxication, and then in encouraging and requiring him to drive away drunk. In these circumstances, as in Bajwa, On Stage itself was affirmatively negligent, so no special relationship need be established between it and the Simmonses for them to have a viable claim against the striptease club.
On Stage separately relies on social host cases in arguing that a special relationship must be established. But those cases are readily distinguishable since, as discussed, preemption applied, making causation a moot issue. The same distinction applies to the tavern and social host cases defendant cites in claiming that Illinois courts have held that imputing a duty under the circumstances presented here is improper. (Br. at 30, et seq.) Under the extraordinary facts alleged by plaintiffs, the finding of duty is appropriate. Not only were the resulting deaths entirely foreseeable, indeed predictable, but considerations of public policy favor imposing a duty. On Stage allegedly followed a clever business plan where the booze flowed freely at the encouragement of its servers, where the dance girls got big tips, and where the club shared in the substantial profits. Under its plan, On Stage created the wild, wild Midwest in West Chicago. It encouraged its customers to live it up – live it up at the expense of the deaths John Chiariello, April and Addison Elizabeth Simmons, and untold others who were killed or maimed as a result. Considerations of public policy and fairness, as well as common law principles set forth in the RESTATEMENT (SECOND) of Torts §876, cry out for imposing the rule of law to rein in this defendant.
CONCLUSION
WHEREFORE, the Illinois Trial Lawyers Association asks that the Court affirm the trial court’s and appellate court’s denial of defendant’s motion to dismiss as to all plaintiffs, without regard to plaintiff John A. Chiariello’s status as a customer of On Stage’s striptease club.
Respectfully submitted,
Illinois Trial Lawyers Association
By: William Lazarus
Sexual battery claim against physician before high court.
Introduction
The appellate court erred in disregarding the context of Kristen Kaufmann’s claim. The court focused on the moment of the January 2006 sexual battery by Roger A. Schroeder, M.D., rather than his treatment of her since 2004. It ignored the totality of Kaufmann’s care, including her stay at Jersey Hospital as well as Dr. Schroeder’s treatment. “We are all born mad. Some remain so,” the playwright Samuel Beckett wrote in Waiting for Godot. A newborn cannot make sense out of the world. It takes a realization of associations, and understanding of context, for the babe to become a rationale human being. Similarly, Kaufmann’s actions cannot be understood without considering her involvement as a patient obtaining medical care. In being blind to the totality of the situation under which Plaintiff was sedated while being treated by Dr. Schroeder at the hospital, the court’s decision conflicts with this Court’s decisions in Brucker v. Mercola, 227 Ill. 2d 502 (2007) and Orlak v. Loyola University Health System, 228 Ill. 2d 1 (2007) as well as decisions by lower Illinois appellate courts.
ARGUMENT
- I. It is appropriate to consider 735 ILCS 5/13-212 in interpreting the Tort Immunity Act amendment.
At issue is the meaning of the June 4, 2003 amendment to the Tort Immunity Act extending the statute of limitations to two years in actions for damages for injury or death against any local public entity or public employee, “whether based upon tort, or breach of contract, or otherwise, arising out of patient care…” 745 ILCS 10/8-101(b). Given that no cases have interpreted this statute, the parties and the court below appropriately looked to Brucker, Orlak, and other cases interpreting parallel language in 735 ILCS 5/13-212, which sets forth a statute of limitations and statute of repose for tort, breach of contract or other actions against any physician, dentist, registered nurse or licensed hospital.
- II. Illinois courts have repeatedly interpreted section 3-212 to apply to claims not involving medical malpractice.
In interpreting section 3-212, this Court and other Illinois courts have interpreted “the arising out of patient care” language” to apply to claims that did not simply allege medical malpractice. In Brucker, a receptionist assistant to Dr. Joseph Mercola mistakenly put selenium into a bottle sold as L-Glutamine that was sold to Dr. Mercola’s patient, Anna Marie Bruckner. The accompanying directions called for mixing a teaspoon of powder with a glass of water, which was an amount more than 20,000 times the safe dosage of selenium. Anna Brucker was pregnant at the time. She and her husband sued Dr. Mercola, alleging that their son was poisoned in utero when Anna ingested the selenium powder.
This Court rejected arguments that the statute of repose limit imposed by section 13-212 was not applicable, whether Dr. Mercola’s acts were deemed to be medical malpractice by a physician or ordinary negligence by a retail vendor of supplements. It noted that the legislature passed 735 ILCS 5/2-622(a) (West 2006) and thus knows to address medical malpractice when it wishes to do so. The court then stated,
Because the legislature instead made section 13-212 applicable when the plaintiff seeks damages for injury or death, whether in tort, breach or contract, or otherwise, arising out of patient care, we must presume that the legislature did not intend “patient care” to be synonymous with “medical malpractice.” Perhaps the easiest way to state the point is that all medical malpractice claims involve injuries arising out of patient care, but not all injures arising out of patient care were by reason of medical malpractice.
Brucker, 227 Ill.2d at 532. Whether the claim was for ordinary negligence or medical malpractice, the court found, “[b]oth actions are covered by section 13-212(b) if the injury arose out of patient care.” Id. at 533. Thus, the negligent packaging of the wrong chemical in a bottle meant for another medication fell under section 13-212. It made no difference that the negligent act itself could hardly be deemed “patient care”.
The Supreme Court further stated that “[s]ection 3-212(b) is broader than section 2-622(a) [relating to medical malpractice claims], and it is clear that there are some situations in which a plaintiff would have to file within the time limits prescribed by section 13-212(b), but would not have to attach an attorney’s affidavit or a health professional’s report.” Id. at 517.
In Orlak, the Court reached the same conclusions, finding that the statute of repose provision of section13-212(a) applied to bar an action alleging a hospital’s failure over the course of 11 years to notify the plaintiff that a transfusion should be tested for viral hepatitis. The plaintiff sought to characterize the matter as an administrative failure that was independent of the care she received years earlier. This Court rejected that argument, finding,
It is clear that the legislature intended the statute of repose to operate in a very broad manner and it has been interpreted in that manner by courts addressing the issue. The question is not whether the plaintiff has alleged medical negligence or ordinary negligence. Rather, the sole issue is whether the plaintiff’s claim arose from patient care. The word “arise” is defined in Black’s Law Dictionary as “[t]o originate; to stem (from),” or “to result (from).” Black’s Law Dictionary 115 (8th ed. 2004). “Arise” is also defined elsewhere as “to originate from a source.” Merriam-Webster’s Collegiate Dictionary 66 (11th ed. 2006).
Orlak, supra, 228 Ill.2d at 14-15. Given this broad meaning of the word “arise”, the Court found, as it found in Brucker, that the statute simply required
“a causal connection between the patient’s medical care and the injury. While the phrase does not need to be construed so broadly as to encompass ‘but for’ causation, it clearly covers any injuries that have their origin in, or are incidental to, a patient’s medical care and treatment.” Brucker, 227 Ill. 2d at 523-24, 2007 Ill. LEXIS 1838, at *31.
Orlak, 228 Ill. 2d at 15.
III. Kaufmann’s injuries arose out of her patient care.
Here, Plaintiff’s injuries had their origin in and were incidental to her medical care and treatment at Jersey Community Hospital for a urinary tract infection. Had she not been in treatment, Dr. Schroeder would not have had the opportunity to commit his sexually deviant act. His act arose out of her treatment; it was not a mere happenstance. Dr. Schroeder did not, by chance, fall out of a cabinet, hitting Kaufmann on the head and knocking her out. As her doctor, he sedated her. He was able to sedate Kaufmann and then perform his deviant sexual act because of his presence as her physician at the hospital.
Orlak discusses several cases in which lower appellate courts gave the same interpretation to the parallel “arising out of patient care” language of section 13-212(a) years before the Illinois Legislature revised the Tort Immunity Statute by adding section 8-101(b) with language parallel to section 13-212(a). Had the legislature wished to narrow the scope of section 8-101(b) to only address medical malpractice situations rather than a gamut of circumstances arising out of patient care, it could have, and would have, dropped the broad “arising out of” language. The legislature also could have restricted the statute’s application to medical malpractice tort claims, rather than claims based upon “tort, or breach of contract, or otherwise”. But it chose not to do so.
IV. Legislative intent is clear as to the amendment of the Tort Immunity Act, given prior court decisions on section 13-212(a).
As this Court has explained, the “cardinal rule of statutory construction is to ascertain and give effect to the intent of the legislature. …That intent is best gleaned from the words of the statute itself, and where the statutory language is clear and unambiguous, it must be given effect. …A court should interpret a statute, where possible, according to the plain and ordinary meaning of the language used.” Orlak, supra, at 228 Ill.2d at 8. (Citations omitted.)
The plain meaning of section 8-101(b) is the same meaning of section 13-212(a), given the parallel construction. This Court is well familiar with the broad interpretation of the “arising out of patient care” language made by appellate courts prior to 2003; it discussed the precedents in depth in both Orlak and Bruckner.
Time and again, plaintiffs seeking to avoid the statute of limitations or the statute of repose contained in section 13-212 have argued, as Jersey Community Hospital argues here, that their case did not involve patient care, and, therefore, should not fall under the statute. Time and again, Illinois courts have rejected that assertion, finding that the phase “arising out of” has significance.
In 1989 in Miller v. Tobin, 186 Ill App.3d 175 (2d Dist. 1989), plaintiff alleged that the defendant, a psychiatrist, revealed confidential information to the patient’s wife, who also was seeing the defendant for marriage counseling. Plaintiff alleged breach of contract and violation of the Mental Health Developmental Disabilities and Confidentiality Act. Though the trial court concluded that plaintiff’s complaint was not a malpractice action, it granted defendant’s motion to dismiss, ruling that the limitations set forth in section 13-212 did apply because his injury arose out of treatment by the defendant. The appellate court affirmed, finding that “the pertinent issue is not whether plaintiff’s suit alleges malpractice, but whether plaintiff’s injuries arose out of patient care.” Id. at 174. That an illegal breach of confidence could hardly be deemed to be “patient care” made no difference since the plaintiff and his wife were under treatment and therefore the alleged breach arose out of patient care.
Here, defendant alleges that Dr. Schroeder’s deviant acts were not patient care. No matter. They arose within the context of treatment. They arose out of patient care and therefore are encompassed by 8-101(b).
Similarly, in Walsh v. Barry-Harlem Corp., 272 Ill.App.3d 418 (1st Dist. 1995), the appellate court upheld the dismissal of a complaint that alleged that doctors fraudulently performed unnecessary eye surgery, resulting in economic loss. The court noted, citing Hayes v. Mercy Hospital & Medical Center, 136 Ill.2d 450, 459 (Ill. 1990) that the words in section 13-212 “or otherwise” were meant to be “all inclusive. Walsh, supra, 272 Ill.App.3d at 422. Further, the court cited the broad meaning of the plain language covering “injury … arising out of patient care” and found it would apply even though no physical injury was alleged in the complaint. Thus, plaintiff’s economic fraud complaint came under section 13-212, even though purposefully performing unnecessary surgery bears more similarity to an intentional battery than to patient care. But the surgery arose out of the medical care rendered to plaintiff, and that made the statute apply however the care was characterized. Similarly, here Dr. Schroeder’s unnecessary administration of sedation and ensuing deviant sexual battery on Plaintiff arose out of her medical care, no matter how the sedation and battery themselves are characterized.
The Seventh Circuit also has given broad reach to section 13-212. In Stiffler v. Lutheran Hospital, 965 F.2d 137 (7th Cir. 1992), plaintiff suffered injury when a prosthetic device implanted in her chest broke off and became entangled in her intestines. She filed a products liability action, but the court found that section 13-212 barred the claim since it arose out of patient care; the court noted that medical materials are so “inextricably linked” with treatment that their use “almost per se arises ‘out of patient care.’” Id. at 140-141. Here, Dr. Schroeder’s sedation of Kaufmann was inextricably linked both to his provision of medical care and his subsequent battery.
Defendant argues that Dr. Schroeder’s use of drugs and ensuing deviant sexual act could have happened anywhere. But it cannot and does not deny that it happened at the hospital where Kaufmann was undergoing care for a urinary tract infection. One can always speculate that anything can happen anywhere. But such speculation does not erase the fact that the wrongful acts alleged here arose out of the care that Kaufmann was receiving at the hospital. Her exposure to Dr. Schroeder was not a happenstance occurrence, but part of her care in the hospital and her continuing care by the physician. Dr. Schroeder had access to her because of the hospital’s trust and her trust, a trust that was reinforced by the hospital environment.
- V. Defendant’s out-of-state cases addressed medical malpractice and are thus irrelevant as well as lacking precedential authority in Illinois.
Defendant, as did the appellate court, cited two out-of-state cases – Doe v. Cherwitz, 894 F. Supp 344 (S.D. Iowa 1995) and Burke v. Snyder, 899 So.2d 336 (Fla App. 2005), in an effort to support the claim that the alleged wrongful acts by Dr. Schroeder did not arise from patient care. In addition to not being precedent in Illinois courts, the cases themselves fail to bolster defendant’s argument. In Burke, the court concluded that “the claim of sexual misconduct in this case is not a claim arising out of negligent medical treatment.” Id. at 341. But, as discussed, in Illinois, neither section 13-212(b) nor section 9-101(b) are restricted to claims arising out of negligent treatment, i.e. medical malpractice. Rather, they may sound in “tort, breach of contract, or otherwise” and need only arise out of patient care, not negligent patient care. Cherwitz is similarly distinguishable since the case addressed Iowa Code § 614.1(9) addressing “Malpractice. … arising out of patient care.” Cherwitz, 894 F. Supp. at 345. As this Court has found, allegations of malpractice are not requisite to a section 13-212(b) action. Neither should they be requisite in an action based on section 9-101(b), given its parallel wording.
This Court and Illinois appellate courts have consistently found section 13-212(b) to be unambiguous. The same lack of ambiguity exists in the parallel plain and ordinary wording of section 8-101(b). It is thus not appropriate to speculate based on a legislator’s brief and vague oral comment cited by Defendant as to the meaning of the section intended by the entire legislature. Rather, the language of the statute must control.
Dr. Schroeder’s deviant battery upon Kaufmann occurred at Defendant’s hospital and arose out of her treatment at the facility. No matter how that battery and accompanying sedation are characterized – as negligence, an intentional tort, breach of contract, or otherwise – the wrongful acts fall under section 9-101(b) of the Tort Immunity Act. This Court and Illinois appellate courts have set forth the standards for applying the parallel language embodied in section 13-212. Those standards are based upon principles of statutory interpretation, not on an inequitable and illogical notion that the statute of limitation and repose should only apply to deny plaintiffs the right to sue, and never to allow it.
CONCLUSION
WHEREFORE, the Illinois Trial Lawyers Association, as amicus curiae, requests that this Court reverse the Appellate Court’s decision and remand the case for further proceedings.
Respectfully submitted,
Illinois Trial Lawyers Association
By: __________________________
William Lazarus
William Lazarus, ARDC #6187706
18400 Maple Creek Dr., Suite 500
Tinley Park, IL 60477
(708) 444-0220
(708) 249-3034 (fax)
Brief in scope of employment appeal
IN THE THIRD DISTRICT APPELLATE COURT
OF THE STATE OF ILLINOIS
Appellate Case No. 3-09-0410
_______________________________________________________
PAMELA J. WATSON and )
DARRYL WATSON )
) Appeal from the Circuit
Plaintiffs-Appellants ) Court of the Twelfth
) Judicial District Circuit
v. ) Case No. 06L686
) The Honorable Judge
DANIEL T. MESICH and ) Michael J. Powers,
IMPERIAL CONSTRUCTION ) presiding
ASSOCIATES, INC. )
)
Defendants-Appellee )
____________________________________________________
APPELLANTS’ BRIEF
____________________________________________________
William Lazarus, Attorney No. 6187706
Law Office of William Lazarus
18300 Dixie Highway
Homewood, Illinois 60430
Tel: (708) 215-0348
Fax: (708) 249-3034
Gregory T. Mitchell, Attorney No. 6195711
Law Office of Gregory T. Mitchell, P.C
18141 Dixie Highway
Homewood, Illinois 60430
Tel: (708) 799-9325
Fax: (708) 799-9326
Attorneys for Plaintiffs-Appellants
ORAL ARGUMENT REQUESTED
POINTS AND AUTHORITIES
Standard of Review
Cases
Pyne v. Witmer, 129 Ill. 2d 351 (1989)……………………………………………………………. 6
BlueStar Energy Services, Inc. v. Illinois Commerce Comm’n,
374 Ill. App. 3d 990 (2007)……………………………………………………………………………… 6
Delaney Electric Co. v. Schiessle, 235 Ill. App. 3d 258 (1992)……………………….. 6
Williams v. Manchester, 228 Ill. 2d 404 (2008)……………………………………………….. 6
Other
Restatement (Second) of Agency § 228, Comment d………………………………….. 6
735 ILCS 5/2-1005(c) (West 2006)…………………………………………………………………. 6
The trial court erred in finding that Mesich’s trip to work was not within the scope of his employment.
- A. Taking ladders home for possible use on job made trip within scope of employment.
Jacks v. Woodruff, 9 Ill. App. 2d 224 (1st Dist. 1956)……………………………………….. 7-8
- B. Picking up supplies for next day made drive within scope, despite after-work drinking binge.
Sloma v. Pfluger, 125 Ill.App.2d 347 (2d Dist. 1970)………………………………………. 8-10
Hogan v. City of Chicago, 319 Ill. App. 531 (1943)…………………………………………. 10
Urban v. Industrial Commission, 34 Ill2d 159 (1966)……………………………………… 10
Christian v. Chicago & I. M. Ry. Co., 412 Ill 171 (1952)…………………………………. 10
- C. A possible coffee stop would make no difference.
Pyne v. Witmer, 129 Ill. 2d 351 (1989)……………………………………………………………. 12
Sloma v. Pfluger, 125 Ill.App.2d 347 (2d Dist. 1970)………………………………………. 11
- D. Employee’s plan to pick up tool created issue of fact for jury.
Fakhoury v. Vapor Corporation, 154 Ill.App.3d 531 (1st Dist. 1987)………………… 12-13
Fakhoury v. Vapor Corporation, 218 Ill.App.3d 20 (1st Dist. 1991)…………………… 13
- E. Trip to unload equipment was within scope.
Leszinske v. Grebner, 89 Ill.App.2d 470 (2d Dist. 1967)…………………………………. 13-15
- F. Assignment to different job sites creates fact issue.
Leszinske v. Grebner, 89 Ill.App.2d 470 (2d Dist. 1967)…………………………………. 14
- G. Travel incident to test was partly for employer’s purpose.
Pyne v. Witmer, 129 Ill. 2d 351 (1989)……………………………………………………………. 15-16
- H. Restatement criteria met as to scope of employment.
Cases
Korczak v. Sedeman, 2005 U.S. App. Lexis 21531 (N.D. Ill. 2004)………………….
Other
Second Restatement of Agency §228 (1958)…………………………………………… 16-17
- I. Requirement at least creates issue of fact.
Pyne v. Witmer, 129 Ill. 2d 351 (1989)……………………………………………………………. 19
Laird v. Baxter, 272 Ill. App. 3d 280 (1st Dist. 1994)……………………………………….. 18
Urban v. Industrial Commission, 34 Ill2d 159 (1966)……………………………………… 18
Nattens v. Grolier Soc., Inc., 195 F.2d 449 (7th Cir. Ill. 1952)………………………….. 18
Katsinas v. Colgate-Palmolive, 299 Ill. App. 347 (3rd Dist 1939)…………………….. 18-19
Reilly v. Peterson Furniture, 314 Ill. App. 46 (1st Dist. 1942)…………………………… 19
Jacks v. Woodruff, 9 Ill. App. 2d 224 (1st Dist. 1956)……………………………………….. 19
Sloma v. Pfluger, 125 Ill.App.2d 347 (2d Dist. 1970)………………………………………. 19
STATEMENT OF THE NATURE OF THE CASE
This appeal concerns whether defendant Daniel Mesich was acting within the scope of his employment as he was driving early one morning to a jobsite to which he had been assigned that day by his employer Imperial Construction Associates, Inc. (“Imperial”), and to which he was required by Imperial to bring his own tools for use on the job. As he was on his way to work, Mesich crossed the center line and crashed into the vehicle driven by Pamela Watson. Pamela Watson and her husband Darryl Watson sued Mesich, alleging negligence, and later added Imperial, alleging respondeat superior liability. The issue here was not raised by the pleadings, and no jury trial took place. Imperial moved for summary judgment, alleging it owed no duty to plaintiffs as Mesich was acting outside the scope of his employment at the time of the crash. The trial court granted Imperial’s motion.
ISSUE PRESENTED
Whether defendant Daniel Mesich was acting within his scope of employment in driving to a jobsite assigned by his employer Imperial where:
1) Imperial required Mesich to bring his own tools needed to conduct his work at changing jobsites, though it did not pay him for travel time;
2) Mesich was driving with his tools directly to the jobsite that morning, with only the possible exception of a coffee stop; and
3) Imperial was required by its contract on the job to furnish all materials and supplies as well as labor and supervision to complete its work at the jobsite.
JURISDICTION
In granting summary judgment to Imperial, the trial court ordered its ruling “final and appealable pursuant to Illinois Supreme Court Rule 304(a).” (A2)
STATEMENT OF FACTS
On August 28, 2006 at about 5:28 a.m., Daniel Mesich was driving south on Rt. 59 in Plainfield, Illinois, at the intersection with Lockport Street. (A12-13, A15) Mesich testified in deposition that his Chevy Tahoe crossed into the northbound lane and crashed into plaintiff Pamela Watson’s vehicle, and that he had swerved to avoid a dump truck that pulled in front of him at the intersection. (A15)
At the time of the accident, Mesich was going directly to the jobsite from his home though he may have stopped for coffee. (A19-20). His home was in Plainfield. (A3a) He had travelled only a few minutes that morning. (A27) He had his tools for work with him at the time of the crash. (A20)
Mesich worked for Imperial Construction Associates as an Ironworker involved in the erection of steel structures. (A5) As a condition of his work, Imperial required him to bring his own tools to the jobsites. (A6) He purchased those tools himself. (A6) He had been employed as a full-time employee for Imperial for about seven years at the time of the crash. (A3-4) That morning, he was assigned to work at McCormick Place in Chicago. (A28)
Mesich was assigned to “drive to a job site, a different job site every morning.” (A26) He typically had to arrive by 7 a.m. (A11) He suspected location assignments were made by office workers throwing darts at a board. (A7) Mesich usually used Mapquest to learn the route to the jobsite. (A23) He was paid by Imperial each week for the number of hours worked at the jobsites. (A8-9) He received no reimbursement for mileage or gas, but was free to turn down a job if he deemed it to be too far away. (A24) His hourly pay and medical insurance were his only compensation for his work, including his provision of his own tools at the jobsites. (A24-25)
As a subcontractor at the McCormick Place jobsite, Imperial was, among other things, required to “provide all supervision, and materials and perform all labor necessary” to complete its work at the site. (A29-30)
ARGUMENT
Standard of Review
Summary judgment is only appropriate “if 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 5/2-1005(c) (West 2006). “‘In addition, the court must draw all reasonable inferences from the record in favor of the nonmoving party.’” BlueStar Energy Services, Inc. v. Illinois Commerce Comm’n, 374 Ill. App. 3d 990, 993-94 (2007), quoting Delaney Electric Co. v. Schiessle, 235 Ill. App. 3d 258, 262 (1992). Summary judgment is a drastic method of disposing of litigation and should only be granted where the movant’s right to judgment is clear and free from doubt. Williams v. Manchester, 228 Ill. 2d 404, 417 (2008). Summary judgment rulings are reviewed de novo on appeal. Id. at 418.
To be held vicariously liable under the doctrine of respondeat superior for an employee’s torts, the tort must have been committed within the scope of employment. Pyne v. Witmer, 129 Ill. 2d 351, 359 (1989). Where the scope of employment is at issue, summary judgment
is generally inappropriate. … Only if no reasonable person could conclude from the evidence that an employee was acting within the course of employment should a court hold as a matter of law that the employee was not so acting.
Id.; accord Restatement (Second) of Agency § 228, Comment d, at 505 (1958). Where reasonable persons could draw divergent inferences from the undisputed facts, “an issue should be decided by the trier of fact and summary judgment denied”. Pyne, 129 Ill.2d at 359.
The trial court erred in finding that Mesich’s trip to work was not within the scope of his employment.
Overview
Substantial case law concerning employees who travel to and from work while carrying tools required for the job show the trial court erred in finding that, as a matter of law, Mesich was not acting within the scope of his employment at the time of the crash in issue. Indeed, the cases show that Mesich was within the scope of his employment while driving to work on the morning of the crash. Even if the fact that Mesich was not paid for driving time were given weight toward finding that he was not acting within the scope of his employment, the opposing facts that he was required to bring his tools and was required to drive to different jobsites daily as assigned by Imperial would at least present a jury question as to the scope.
A. Taking ladders home for possible use on job made trip within scope of employment.
In Jacks v. Woodruff, 9 Ill. App. 2d 224 (1st Dist. 1956), Clarence Woodruff employed his brother Vern to help paint Clarence’s Evanston house and to assist in remodeling its shop in the rear. Vern left the job at the end of the day, hauling two extension ladders on the top of his car to his home in Des Plaines, thinking that the ladders would be available if they were needed at the next day’s job in Des Plaines. Id. at 232. On the drive, Vern ran into Edmund Jacks, a pedestrian, who sued. At trial, Clarence denied authorizing the use of the ladders at his house or even knowing about them, and Jacks presented evidence of admissions to the contrary. The jury rendered its verdict in favor of Jacks. The trial court entered a judgment notwithstanding the verdict in Clarence’s favor, finding as a matter of law that Vern was not acting as Clarence’s agent as he drove home after work on the evening of the crash. The scope of Vern’s employment, as reflected in the evidence presented at trial, was the only issue on appeal. The appellate court reinstated the verdict, finding that the jury had been presented with competent evidence that Vern was his brother’s agent at the time of the occurrence. Id.
In this case, in contrast to Jacks, the evidence is undisputed that Mesich was transporting tools that he was required to take to work. Imperial admitted this. (A28-28a) Just as it was appropriate for the jury to find that Vern was his brother’s agent, acting within the scope of his employment at the time of the crash, it would be appropriate for a jury to reach the same conclusion in this case, if a jury would have to consider the matter at all. Like Vern, Mesich was driving while carrying equipment for the job at the time of the crash. Unlike Vern, Mesich was specifically required to bring his tools to work. That requirement suggests that, as a matter of law, Mesich was acting within the scope of his employment at the time of the crash, not vice- versa, as found by the trial court in granting summary judgment to Imperial.
- B. Picking up supplies for next day made drive within scope, despite after-work drinking binge.
Sloma v. Pfluger, 125 Ill.App.2d 347 (2d Dist. 1970), also shows the error the trial court made in this case. Sloma involved two employees of Wood Construction Company, Richard Lee Carpenter, a skilled worker who was assigned to various job sites, and James Sloma, a laborer-apprentice assigned by the company to work with Carpenter. Sloma lived about a half block from Carpenter, and rode with Carpenter in the latter’s pickup truck to and from the various jobsites assigned by Wood. On the day in question, Carpenter and Sloma finished the job, left the jobsite at about 3:30 p.m., and drove to a tavern near Belvidere where they often stopped while working in the area. Over the course of about two and a half hours, Carpenter drank five or six bottles of beer in the tavern. After leaving, Carpenter crashed his pickup and died. Sloma was seriously injured.
Whether Carpenter and Sloma were acting within the scope of their employment at the time of the crash were at issue in the case. Sloma testified that Carpenter said he was on his way to pick up supplies needed for work the next day. Wood maintained trailers in different locations – one of which was near Carpenter’s home — from which company superintendents or employees would obtain supplies which they would carry to jobsites. Only Carpenter, not Sloma, was authorized and expected to pick up supplies for jobsites, and no evidence showed Sloma had that obligation. Thus, the court found the facts suggested that Sloma’s own
scope of employment began and ended at the jobsite; that there was nothing to take him out of the normal rule that travel to and from the place of employment is beyond the realm of the employment relationship; and that one injured in the course of such travel is not injured as an employee.
Id. at 356, citing Urban v. Industrial Commission, 34 Ill2d 159, 161, 214 NE2d 737 (1966); Christian v. Chicago & I. M. Ry. Co., 412 Ill 171, 175, 105 NE2d 741 (1952).
Accordingly, the court found that Sloma was not acting as Wood’s agent at the time of the crash (and thus was not barred from bringing a personal injury claim against Wood).
But the court found that whether Carpenter – even after his drinking binge — was acting within the scope of his employment presented a question that was properly put to the jury to decide. Though the court acknowledged that Carpenter was “on a lark of his own” at the tavern, it upheld the verdict against Wood. It found:
The mere fact that Carpenter was driving his own truck and not one belonging to Wood, is not decisively significant. Unlike most employees, Carpenter brought the supplies needed for a particular day’s work to the jobsite, and Wood provided a supply trailer, near Carpenter’s home, for his use. Carpenter had a pickup truck so that he could carry these supplies. Ignoring for a moment the personal lark of Carpenter and the question of the effect of the deviation from the course of his employment, inasmuch as he was intending to get his supplies for the next day, he was driving his pickup truck with the implied authority of Wood.
The lack of immediate supervision over Carpenter in picking up his supplies, appeared no less than that exercised over him at the jobsite. Wood knew that Carpenter picked up his own supplies and provided a special trailer for this purpose. Thus, Carpenter’s use of his own vehicle for his employer’s business was not only with the latter’s knowledge and consent, but also with his encouragement. When so driven, it was within the course of Carpenter’s employment.
Id. at 356-357, citing Hogan v. City of Chicago, 319 Ill. App. 531, 539, 543-546, 49 NE2d 861 (1943).
In this case, too, Mesich used his own vehicle for his employer’s business. Instead of picking up materials needed for the next day’s work for subsequent transport to the employer’s job site, Mesich took his own tools to each job site assigned on a daily basis. Not only did Imperial know of and consent to this arrangement, it required Mesich to so transport his tools to the ever changing job sites. On the day of the accident at issue, Imperial assigned Mesich to a job where Imperial itself was contractually required to bring all the materials necessary to complete its work. Mesich’s tools were, by reasonable inference, among those materials necessary for the company to fulfill its contract.
- C. A possible coffee stop would make no difference.
The “critical” and difficult issue in Sloma, which the court found appropriate for the jury to resolve, was whether Carpenter had discontinued his extended deviation from his course of employment, and returned to acting within the scope of employment when he left the bar to pick up supplies. Here, no such difficult issue exists. Mesich’s testimony establishes he was heading directly to work on the morning of the crash, with only the possibility of a stop for coffee on the way. Such a stop – if one even occurred – would amount to no more than a minor deviation which could not, as a matter of law, take Mesich’s trip outside the scope of his employment since “[a]n employee may combine personal business with the employer’s business at the time of negligence, yet the employer will not necessarily be relieved of liability on that account. … Where an employee’s deviation from the course of employment is slight and not unusual, a court may find as a matter of law that the employee was still executing the employer’s business.” Pyne, supra, 129 Ill.2d at 361.
Given that in Sloma, the employee’s travel in his own vehicle, with the employer’s concurrence, after the end of the workday to pick up tools for the next day’s job was deemed to be within the scope of employment, so, too, must an employee’s travel to work and delivery of tools, at the employer’s demand, be within the scope of employment. Thus, Mesich was acting within the scope of his employment as he drove, with the required tools in his truck, towards that day’s jobsite.
- D. Employee’s plan to pick up tool created issue of fact for jury.
Fakhoury v. Vapor Corporation, 154 Ill.App.3d 531 (1st Dist. 1987), also involved a question of tools and scope of employment. In Fakhoury, James Guyon was a serviceman employed by Vapor. Like Mesich, he drove his own car, and like Mesich he was regularly assigned to work at different job sites. On the day of the accident, Guyon was working at Vapor’s plant in Chicago. He had been assigned to drive to Madison, Wisconsin the following day, and planned to leave his home at 6 a.m. When Guyon left work in Chicago at 4:30 p.m., he stated he drove to a hardware store to buy a carpenter’s square for his use the next day. When the square wasn’t available, Guyon returned to his car and was on the way to a lumber store in the area when the accident occurred. Guyon did not purchase the carpenter’s square that day, and used the customer’s square the next day in Madison. On these facts, the appellate court determined that the trial court erred in directing a verdict on respondeat superior in plaintiff’s favor since “verdicts ought to be directed and judgments notwithstanding the verdict entered only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors the movant that no contrary verdict based on the evidence could ever stand.” Id. at 536. On retrial, after hearing Guyon’s testimony concerning his intended personal use of the square, the jury decided in favor of Vapor, which contended that Guyon was on a personal trip at the time of the accident. Fakhoury v. Vapor Corporation, 218 Ill.App.3d 20, 24 (1st Dist. 1991).
E. Trip to unload equipment was within scope.
In Leszinske v. Grebner, 89 Ill.App.2d 470 (2d Dist. 1967), the court determined as a matter of law that the passenger of a vehicle was within the scope of his employment when he died in a car crash. Otto Grebner, the driver, employed Lyle Leszinske to paint houses. The crash occurred when Grebner lost control of his vehicle and swerved into oncoming traffic about 6:30 p.m. The two had finished painting for the day and were on their way to unload equipment. That was enough, the court found, to make the incident within the scope of Leszinske’s employment. The court explained:
It is generally held that accidents which occur while an employee is going to and from his place of employment do not arise out of and in the course of employment. [citations omitted] This general rule, however, is not applicable where the employee’s trip is determined by the demands of his employment or where his duties as employee take him to the place of his injury. [citations omitted]
In the case at bar, the general “going to and coming from work” rule obviously cannot be applied. Leszinske’s employment for the day had not ended if he was going to Grebner’s workshop to help unload the station wagon. To fulfill this obligation of his employment, Leszinske was riding with his employer, Grebner, at a time when and at a place where he might reasonably be expected to be. Leszinske was “in the course of his employment.”
Id. at 476.
In this case, while Mesich did not have his employer at his side at the time of the accident, he was carrying required equipment to the day’s jobsite. That fact alone is adequate to at least create an issue for the jury to decide under Jacks, Sloma, Fakhouri, and Leszinske.
F. Assignment to different job sites creates fact issue.
Furthermore, Mesich did not supply his tools each day to the same jobsite. Rather, he was assigned to a different jobsite on a daily basis. (A 26) That is why he had to carry his tools with him. If he never changed jobsites, there would be no need to transport the tools. He could simply leave them. This fact, too, shows the trial court’s error in determining as a matter of law that Mesich was not acting within the scope of his employment as he drove to the assigned jobsite on the morning of the crash. Leszinske noted the importance of the assignment not being to a regular place of work since
there is a critical distinction between travel that results from the employee’s decision as to where he wants to live, and travel that is required by the exigencies of the job. This distinction suggests to us the possible application of the [Worker’s] Compensation Act [as the work would have been within the scope of employment] even if Grebner and Leszinske were only returning to Grebner’s house.
Leszinske, 89 Ill.App.2d at 477. Thus, Leszinske indicates that Mesich’s travel to different worksites on a daily basis alone is enough to at least create an issue of fact as to whether he was within the scope of his employment on his drive to work on the morning of the crash.
- G. Travel incident to test was partly for employer’s purpose.
In Pyne v. Witmer, supra, the Illinois Supreme Court also focused upon the issue of whether plaintiff’s deceased was on a frolic outside his scope of employment after he took a test for which his employer at least temporarily paid. As in Sloma, however, the discussion concerning scope of employment strongly suggests that Mesich was acting within the scope of his employment at the time of the crash.
William Witmer left his workplace in Streamwood near the end of a scheduled workday and drove to Rockford to take an evening test to be certified as an automobile mechanic. His employer D.R.W. Enterprises, Inc., which operated a gas station, did not pay him wages, mileage or expenses for his trip. D.R.W. did issue a check to cover the test fee, though it may have expected to be reimbursed by Witmer. Nonetheless, the parties agreed that Witmer was within the scope of his employment while he took the test, and during “travel incident thereto.” Pyne, supra, 129 Ill.2d at 356. By the same measure, Mesich was within the scope of his employment while on a trip incident to transporting his ironworker tools and essential work equipment to his employer’s jobsite.
About two and a half hours after Witmer completed the test, Witmer crashed the car he was driving. It was 10:30 p.m. Blood tests showed Witmer was drunk. The issue was whether he was still in the scope of employment at the time of the crash. The high court upheld the appellate court’s reversal of summary judgment in favor of D.R.W., finding that factual issues precluded a determination that Witmer was on a “frolic” that took him outside the scope of employment during the two and a half hours subsequent to the test.
In its discussion, the court stated,
Generally, an employee traveling to or from work outside actual working hours is not in the scope of employment, but an exception exists for employees who are caused by their employers to travel away from a regular workplace or whose travel is at least partly for their employers’ purposes rather than simply serving to convey the employees to or from a regular jobsite. [citations omitted]
Pyne, 129 Ill.2d at 356. (emphasis added)
In this case, the exception to the general rule applies. In transporting his essential ironworker trade tools (welding equipment) to that day’s worksite, Mesich was “at least partly” traveling for his employer’s purposes, rather than simply getting to work. Imperial required Mesich to carry his equipment to the jobsite because it knew that, without it, Mesich could not perform the work he was employed to do.
H. Restatement criteria met as to scope of employment.
In Pyne, the court cited the guidance offered by the broad criteria set forth in the Second Restatement of Agency for determining whether an employee’s action falls within the scope of employment. The Restatement provides:
(1) Conduct of a servant is within the scope of employment if, but only if:
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized time and space limits;
(c) it is actuated, at least in part, by a purpose to serve the master ****
(2) Conduct of a servant is not within the scope of employment if it is different in kind from that authorized, far beyond the authorized time or space limits, or too little actuated by a purpose to serve the master.
Second Restatement of Agency §228 (1958).
Here, each of the Restatement criteria applies. Mesich was employed to work at daily assigned jobsites, and to bring his tools for use at the sites. Thus, his transportation of his tools was inextricably linked to the work he was employed to perform at that day’s assigned jobsite. Since he was required to bring his tools with him, the area of travel was necessarily within employer-authorized time and space limits, just as the travel area was found to be within authorized limits — or at least an issue of fact existed as to whether it was within authorized limit — in the scope of duty cases involving travel and discussed above.
In Korczak v. Sedeman, 2005 U.S. App. Lexis 21531 (N.D. Ill. 2004), the court found an issue of fact suitable for trial as to whether an employee who transported a co-worker back to his hotel at the end of the work day was acting within the scope of his employment. The employer argued that he was free to do his own business once he clocked off work, and therefore the ensuing accident was outside the scope. But the court noted that the employee not only would transport three or four employees to the jobsite in the minivan lent to him by the employer, but that it was his responsibility to take a particular co-worker back to the hotel at the end of the day because that worker had no other method of returning to the hotel after work. Id. at *10. The court concluded that Thermal Solutions, the employer,
clearly benefited from Sedeman’s use of the minivan. First, Sedeman provided transportation to three to four workers on a daily basis. Without relying on Sedeman to provide this service, Thermal Solutions could not have enjoyed the services of the other workers. Second, by renting a minivan and relying on one worker to provide transportation for others, Thermal Solutions was able to save money on rental costs and gasoline. Moreover, if Thermal Solutions directed Sedeman to provide transportation to other workers, then the act of traveling to and from work is of the kind Sedeman was hired to perform and occurred within the time and scope of his employment.
Id. at *12-13. Similarly, Imperial benefited from Mesich’s use of his truck to transport his tool to jobsites. Had he not done so, Imperial itself would have had to transport Mesich and his tools to the day’s assigned jobsite. Thus, Mesich’s act of traveling to work in his personal vehicle in order to transport his essential trade tools was, in fact, part of the work that Mesich was required to perform for Imperial.
I. Requirement at least creates issue of fact.
Like sales agents and other employees required to carry their wares to travel to different locations on a daily basis, Mesich had to carry his trade tools as he traveled to assigned jobsites that changed daily at the direction of Imperial. Sales agents and other traveling employees have been found to have acted within the scope of their employment as they made their rounds, even where they were sidetracked with alleged frolics. See Laird v. Baxter Health Care Corp., 272 Ill. App. 3d 280, 298 (Ill. App. Ct. 1st Dist. 1994) (noting “the leniency Illinois courts afford travelling employees.”); Urban v. Industrial Commission, supra, and cases cited therein. At the least, courts have found the scope of agency presents an issue of fact for the jury to decide. See e.g. Nattens v. Grolier Soc., Inc., 195 F.2d 449, 453 (7th Cir. Ill. 1952), Katsinas v. Colgate-Palmolive-Peet Co., 299 Ill. App. 347, 350 (Ill. App. Ct. 1939); See also Reilly v. Peterson Furniture Co., 314 Ill. App. 46 (Ill. App. Ct. 1942).
In the trial court, Imperial emphasized Sloma in arguing that Mesich was acting outside the scope of his agency when he drove to work. But unlike the passenger apprentice in that case, who had no duties with regard to unloading materials after work, and like Carpenter, the employee who had such duties, Mesich was required to drive his truck and transport his essential trade tools to the ever changing jobsite. Mesich’s doing so in a direct drive without any frolics was at least as much within the scope of his work as was Carpenter’s driving to pick up materials after a day of work and a lengthy bout of drinking. Sloma, Jacks and other cases discussed above show that Mesich was acting within the scope of his employment as he transported himself and his tools to Imperial’s jobsite on the morning of the crash at issue. At the very least, it cannot be said that “no reasonable person could conclude” this to be the case. Pyne, supra, 129 Ill.2d at 359. Thus, the trial court erred in finding that Mesich was acting outside the scope of his employment and granting Imperial’s motion for summary judgment.
CONCLUSION
WHEREFORE, plaintiffs Pamela J. Watson and Darryl Watson respectfully request this Court find the trial court erred in granting summary judgment to Imperial Construction Associates, Inc., remand the case for trial, and provide guidance to the trial court that Daniel Mesich was acting within the scope of his employment with Imperial on the morning of the crash.
Respectfully submitted,
____________________________
William Lazarus
Law office of Wiliam Lazarus Law office of Gregory T. Mitchell, P.C.
18300 Dixie Highway 18141 Dixie Highway, Suite 111
Homewood, Illinois 60430 Homewood, Illinois 60430
CERTIFICATE OF COMPLIANCE
I, William Lazarus, an attorney, certify that this brief conforms to the requirements of Supreme Court Rules 341(a) and (b). The length of this brief, excluding the appendix pages containing the Rule 341(d) cover, the Rule 341(h)(1) statement of points and authorities, the Rule 341(c) certificate of compliance, the certificate of service, and those matters to be appended to the brief under Rule 342(a), is 18 pages.
________________________________________
William Lazarus
CERTIFICATE OF SERVICE
I, William Lazarus, an attorney, certify that I caused copies of the foregoing Appellants’ Brief to be served upon the persons listed below by mailing, first class postage prepaid, by placing a copy of the brief in a U.S. Postal Service mail receptacle located at 18300 Dixie Highway, Homewood, Illinois before 4 p.m. on September 9th, 2009.
Craig D. Queen, Esq.
Grant, Ross & Fanning
10 South Riverside Plaza
Suite 1770
Chicago, Illinoiis 60606
Bill Porter, Esq.
Chilton Yambert & Porter, LLP
2000 S. Batavia Avenue, 2nd Floor
Geneva, Illinois 60234
_________________________
William Lazarus
Brief – Fitzpatrick v. Allen
IN THE INDIANA COURT OF APPEALS
CASE NO. 64A03-0811-CV-00545
_________________________________________________
DAVID J. FITZPATRICK
d/b/a DAVID J. FITZPATRICK AND ASSOCIATES,
Cross-Defendant/Appellant,
v.
KENNETH J. ALLEN AND ASSOCIATES, P.C.,
Cross-Plaintiff/Appellee.
_________________________________________________
Appeal from the Porter Superior Court
Cause No.: 64D02-0312-CT-10532
The Honorable William Alexa, Judge
_________________________________________________
APPELLEE’S BRIEF
_________________________________________________
Kenneth J. Allen (3857-45)
William Lazarus (24638-64)
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TABLE OF CONTENTS
Table of Contents. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . i
Table of Authorities. . . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . v
Statement of Issues . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 1
Statement of Case . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 2
Statement of Facts . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 3
Hiring Allen, splitting fees. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 4
Action on two fronts. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 5
Settlement approaches, Fitzpatrick proposes new deal . . . . . . .. . . . . . . . . . . . 6
Litigation ensues over fees . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 7
Separation with Hills; default motions . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 8
More delay. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 10
Non answers and default . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 10
Disclosure after default, entry of judgment . . . . . . . . . . . . . . . .. . . . . . . . . . . 12
Summary of Argument . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 14
Argument . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 15
I. The trial court properly entered a default judgment
against Fitzpatrick, and found him to be in breach
of his contract with Allen & Associates. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 15
Standard of Review. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 15
A. The trial court properly exercised its discretion in ordering default. . . . 16
1. Fitzpatrick repeatedly disobeyed orders of the court. . . . . . . . . . 16
2. Lesser sanctions were not required. . . . . . . . . . . .. . . . . . . . . . . 17
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3. False rationalizations underlaid Fitzpatrick’s
contumacious disregard. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 18
B. Fitzpatrick breached his contract with Allen. . . . . . . . . . .. . . . . . . . . . . 19
1. Default establishes breach by Fitzpatrick. . . . . . .. . . . . . . . . . . 19
2. Fitzpatrick, in fact, breached his contract
by repudiating key terms. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 19
II. The trial court properly awarded contract damages
for the breach. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 20
Standard of Review. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 20
A. Fitzpatrick’s breach established his obligation
to pay contract damages. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 20
B. Fitzpatrick’s quantum meruit argument misinterprets
Galanis, wrongly assumes the Hills could unilaterally
amend the contract they approved, and ignores the
consequences of Fitzpatrick’s breach. . . . . . . . . . . . . . .. . . . . . . . . . . 21
1. Under Galanis, the lawyers’ agreement controls. .. . . . . . . . . . . 22
2. The Hills could not amend the contract to fire Allen
on the products case alone. . . .. . .. . .. . .. . .. . .. . .. . .. . .. 24
3. Percentage of fees not challenged. . . . . . . . . . . .. . . . . . . . . . . 26
C. Allen & Associates was entitled to the benefit of its bargain. . . . . . . . . 27
1. The firm performed under the agreement
through the time of breach. . . .. . .. . .. . .. . .. . .. . .. . .. . .. 27
2. Fitzpatrick played wait and see before invoking
equitable relief. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 27
3. Allen & Associates was entitled to share in the products
case fees under contract terms. . . . . . . . . . . . . . .. . . . . . . . . . . 29
D. Allen’s subsequent withdrawal does not defeat his claim
to contractual damages arising from Fitzpatrick’s prior breach. . . . . . . 30
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III. Ethical rules do not preclude Allen’s recovery. . . . . . . . . . . . . .. . . . . . . . . . . 32
A. No rules were violated. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 32
1. Allen’s fee was proper under the alternative
prongs of Rule 1.5(e)(1) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 33
2. Neither Allen nor Fitzpatrick were required to appear as
counsel of record in the case to be handled by the other. . . . . . 34
3. The totality of representation must be considered. . . . . . . . . . . . 35
B. The ethics rules are not to be used as procedural weapons. . . . . . . . . 35
IV. The trial court properly awarded liquidated damages. . . . . . . . .. . . . . . . . . . . 36
A. No hearing was required. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 36
B. Fitzpatrick improperly sought after the judgment to raise
extensive evidence, including claims concerning
the Lewis settlement. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 37
C. Fitzpatrick failed to plead setoff. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 38
D. Under T.R. 19, Allen is entitled to recovery from Fitzpatrick alone. . . . . 39
V. Fitzpatrick’s T.R. 60(B) argument must fail for reasons discussed
above and for failure of evidence of waiver. . . . . . . . . . . . . . . .. . . . . . . . . . . 40
Conclusion . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 42
Word Count Certificate. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 42
Certificate of Service . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 43
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TABLE OF AUTHORITIES
Cases
Babinchak v. Town of Chesterton, 598 N.E.2d 1099 (Ind. Ct. App.1992) . . . . . . . . . 38
Berkel & Co. Contrs., Inc. v. Palm & Assocs., 814 N.E.2d 649 (Ind. Ct. App. 2004) . 20
Boles v. Weidner, 449 N.E.2d 288 (Ind. 1983) . . .. . .. . .. . .. . .. . .. . .. . .. . . 15, 17
Burns v. St. Mary Medical Center, 504 N.E.2d 1038 (Ind. Ct. App. 1987) . . .. . .. . . 18
Centex Home Equty Cor. V. Robinson, 776 N.E.2d 935 (Ind. Ct. App. 2002). . . .. . . 19
Colonial Life v. Newman, 152 Ind. App.554, 284 N.E.2d 137 (1973) . .. . . . . . . . 31, 32
Csicsko v. Hill, 822 N.E.2d 968 (Ind. 2004) . . .. . .. . .. . .. . .. . .. . .. . . 2, 3, 5, 6, 27
Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc.,
722 F.2d 1319, 1323 (7th Cir. Ill. 1983) . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 36
Evansville-Vanderburgh School Corp. v. Moll, 264 Ind. 356,
344 N.E.2d 831 (1976) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 21
Farmer v. Lawson, 855 N.E.2d 686 (Ind. Ct. App. 2006) . . .. . .. . .. . .. . .. . .. 22, 29
Fitzpatrick v. Allen, 2006 U.S. Dist. LEXIS 59643 (N.D. Ill. Aug. 23, 2006) . . .. . .. . 10
Foote v. Baltimore & Ohio R. Co., 465 N.E.2d 219 (Ind.App. 1985). . .. . .. . .. . .. . 17
Freeman v. Mayer, 95 F.3d 569 (7th Circuit 1996) . . .. . .. . .. . .. . .. . .. . .. 25, 34-36
Galanis v. Lyons & Truitt, 715 N.E.2d 858 (Ind. 1999) . . .. . .. 14-15, 20-25, 38-30, 40
Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349 (Ind. 2005) . . .. . .. . .. . .. . .. . . 18
Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751 (Ind. Ct. App. 2002) . . . . . . . 25
Hill v. Baxter Healthcare Corporation, Case No. 01-C-9315 (N.D. Ill.) …. 1-2, 18-19, 24
Hofreiter v. Leigh, 124 Ill. App. 3d 1052; 465 N.E.2d 110 (Ill.Ct.App. 1984) . . .. . 23-24
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Illinois Bankers Life Ass’n. v. Armstrong, 100 Ind. App. 696,
192 N. E. 901 (1934) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 31
INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566 (Ind. Ct. App. 2003),
trans. denied. . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 20
Kincaid v. Lazar, 405 N.E.2d 615 (Ind. Ct. App. 1980) . . .. . .. . .. . .. . .. . .. . . 27, 29
Landis v. Brooks, 637 N.E.2d 1365 (Ind. Ct. App. 1994) . . . . . . . . . .. . . . . . . . 29, 39
Laudig v. Marion County Bd. of Voters Registration,
585 N.E.2d 700 (Ind. Ct. App.1992).. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 37
Mallard’s Pointe Condo. Ass’n v. L&L Investors Group, LLC,
859 N.E.2d 360 (Ind. Ct. App. 2006) . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 36, 40
Matzat v. Matzat, 854 N.E.2d 918 (Ind. Ct. App.2006) . . .. . .. . .. . .. . .. . .. . .. . . 37
Mid-States Aircraft Engines, Inc. v. Mize Co., Inc.,
467 N.E.2d 1242 (Ind.App.1984) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 38
Nesses v. Specialty Connectors Co., 564 N.E.2d 322 (Ind. Ct. App. 1990) . . .. . .. . 18
New York Life Ins. Co. v. Viglas (1936), 297 U.S. 672, 56 S. Ct. 615. (1936) . . .. . . 32
Page v. Schrenker, 439 N.E.2d 694 (Ind. Ct. App. 1982). . . . . . . . . . .. . . . . . . . 27, 29
Paint Shuttle, Inc. v. Continental Cas. Co., 733 N.E.2d 513
(Ind. Ct. App. 2000), trans. denied. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 39
Patton v. State, 537 N.E.2d 513 (Ind. Ct. App. 1989). . .. . .. . .. . .. . .. . .. . .. . .. 38
Prudence Life Ins. Co. v. Morgan, 138 Ind. App. 287, 213 N. E. 2d 900 (1966) . . .. 31
Ralph E. Koressel Premier Elec., Inc. v. Forster,
838 N.E.2d 1037 (Ind. Ct. App. 2005) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 19
Salin Bank & Trust Co. v. Peden Trust, 715 N.E.2d 1003 (Ind. Ct. App. 1999) . . . . . 30
Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332 Ind. 1983) . . .. . .. . .. . .. . .. . . 15
Smith v. Gary Pub. Transp. Corp., 893 N.E.2d 1137 (Ind. Ct. App. 2008) . . . . . . . . . 20
State ex rel. Court Goldsmith v. Marion County Superior, 275 Ind. 545 (Ind. 1.9.8.1.). . . 26
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Stelko Electric, Inc. v. Taylor Community Schools Building Corporation,
826 N.E.2d 152 (Ind. Ct. App. 2005) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 26
Walb Construction Co. v. Chipman, 202 Ind. 434, 175 N.E. 132 (1931) . . . . . . . . . . 21
Wedgewood Cmty. Ass’n v. Nash, 810 N.E.2d 346 (Ind. 2004) . . .. . .. . .. . .. . .. . 28
Whitewater Valley Canoe Rental, Inc. v. Franklin Cty. Bd. of Commissioners,
507 N.E.2d 1001 (Ind. Ct. App. 1987), trans. denied. . . .. . .. . .. . .. . .. . .. 18
Wilt v. Bueter, 186 Ind. 98 (Ind. 1916) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 28
Rules
Indiana Rules Professional Conduct . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 32-36
Rule 1.5(e) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 32-33, 35-36
Trial Rule 8(C) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 38-39
T.R. 19 . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 39
T.R. 19(E)(1). . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 40
T.R. 26(F) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 10
T.R. 55(B) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 36
T.R. 59(A)(1) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . 37
T.R. 59(H) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 38
T.R. 60(B) . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 3, 13, 37, 40-41
Other
CORBIN, CONTRACTS (1951), § 969 . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 32
RESTATEMENT (2ND) CONTRACTS § 235 cmt. a, 237 cmt. c. . . .. . .. . .. . .. . .. . .. . . 30
RESTATEMENT (2ND) CONTRACTS § 243. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 20, 31
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STATEMENT OF ISSUES
1) Did the trial court abuse its discretion in defaulting Fitzpatrick after Fitzpatrick failed to comply with repeated court orders that he disclose on a confidential basis the amount of the settlement in the products liability case, Hill v. Baxter Healthcare Corporation, Case No. 01-C-9315, in federal district court in Chicago..
2) Did the default establish Fitzpatrick’s breach of his agreement with Allen & Associates to share attorney’s fees in the product case as well as the medical malpractice case? Do the facts of this case also show the breach through Fitzpatrick’s repudiation of his agreement to share fees in Hill v. Baxter?
3) Did Fitzpatrick’s breach of his contract with Allen & Associates relieve Allen of any further contractual duty to Fitzpatrick as to litigating the Hills’ medical malpractice case?
4) Did the trial court err in not holding a hearing prior to finding that Fitzpatrick owed liquidated damages under his contract with Allen & Associates of half the attorney’s fees produced by the settlement in Hill v. Baxter?
5) Was the trial court required to apply quantum meruit analysis to determine the amount of attorneys fees due to Allen & Associates from Hill v. Baxter, given: a) the Hills’ global retention of Allen & Associates and their continued retention of the firm at the time of the Baxter settlement; b) the contract of Allen and Fitzpatrick to equally share the attorneys fees generated in both the medical malpractice case in Indiana and the products liability case in Illinois, which was approved by the Hills and did not affect the amount of money they were due; and c) Fitzpatrick’s default?
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STATEMENT OF CASE
Fitzpatrick correctly states that this case concerns a dispute about $2.7 million in attorneys’ fees produced by a settlement of Hills v. Baxter, a products liability case. (Br. 4) Fitzpatrick and Allen agreed to share the fees equally both as to the products case and a medical malpractice case on behalf the Hills, with Fitzpatrick being responsible for litigating the products case in federal court in Illinois and Allen & Associates being responsible for the medical malpractice case in Indiana. (App. 87-88, Br. 7) Fitzpatrick was to split his share of fees with attorney Mitchell Iseberg. (App. 88, 91) For more than two years, Fitzpatrick and Allen litigated the cases as agreed. (App. 165, Csicsko v. Hill, supra, 808 N.E.2d 80 (Ind. Ct. App. 2004), transfer den. On the eve of settling the products case, Fitzpatrick sought to change the 50/50 fee sharing agreement with Allen, and the next day the Hills purported to terminate Allen & Associates as to the products case alone, although they had hired the firm in a global retainer agreement. (App. 91, 160-162, 164, 165) Allen & Associates eventually joined as a cross-plaintiff in this suit for attorneys fees initiated by Neal Lewis, the first attorney hired by the Hills. (App. 125-130, App. 213) On four separate occasions the trial court ordered Fitzpatrick to disclose the settlement of the products case. (App. 171, 242, 329, 401, Supp. App. 3) The court stated the disclosure was to be confidential, and not disclosed to third parties. (App.171, 242) Ultimately, the court defaulted Fitzpatrick for not disclosing as ordered. (App. 62-63) Later, the court awarded Allen contract damages amounting to $1.35 million or half the fees generated in the Baxter case. (App. 64)
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On August 25, 2008, Fitzpatrick filed a combined Trial Rule 59 motion to correct error and a T.R. 60(B) motion for relief from judgment. (App. 570-571) He also filed an affidavit containing facts he had failed to previously present to the trial court, along with 500 pages of exhibits, and which Allen moved to strike, specifying the affidavit and other documents containing evidence outside the record. (App. 563-569, Supp. App. 94) Allen’s accompanying response brief addressed the claimed errors, including Fitzpatrick’s quantum meruit argument and challenge to awarding damages under the contract, entry of judgment without a hearing and issues of liability. (Supp. App. 79, 88-93). Fitzpatrick timely filed this appeal. (App. 57)
STATEMENT OF FACTS
Section I of Appellant’s facts statement accurately, though incompletely, describes John and Susan Hill’s initial retention of attorneys in connection with their underlying claims for medical malpractice and products liability arising from John’s loss of three limbs, and several internal organs, during cardiac bypass surgery in December 1999 at Parkview Memorial Hospital in Ft. Wayne. Csicsko v. Hill, supra, 808 N.E.2d at 81. The Hills first retained Neal Lewis, who settled their claims against the hospital, and then hired Illinois attorneys David Fitzpatrick and Mitch Iseberg on November 19, 2001. (App. 81, 145) Nine days later, Fitzpatrick notified Lewis of his retention, and the Hills advised Lewis of his termination. (App. 82 and 83) Because he was not licensed in Indiana, Fitzpatrick asked
Kenneth Allen to handle the remaining medical malpractice claims against Mr. Hill’s physicians. (Br. 6-7, App. 154 ¶5) On January 11, 2002, Fitzpatrick forwarded Mr. Hill’s medical records to Allen. (App. 84-85) At the end of the month, Fitzpatrick wrote Allen that While Allen himself negotiated with Fitzpatrick, he did so on behalf of his firm Allen & 1 Associates, p.c., the Appellee, and the Hills retained Allen’s firm with respect to all their claims. (App. 87-91) For instance, the contract dated March 8, 2002, although signed by Allen, has Allen & Associates, p.c. at its top. (App. 88) Unless the context specifically indicates otherwise, Allen and Allen & Associates are used interchangeably in this brief.
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he “would be amenable to a written fee arrangement that secures your efforts in the medical negligence action.” (App. 86)
Hiring Allen, splitting fees
After discussions, Fitzpatrick and Allen agreed a month later that Allen and his law firm Allen & Associates would take responsibility for the Indiana medical malpractice litigation and Fitzpatrick would take responsibility for the products liability case in Illinois – an arrangement that the Hills approved. (App. 87, Br. 7) Allen and Fitzpatrick also agreed, with the Hills approval, they would share the fees from the two cases equally, with Allen & Associates taking 50 percent and Fitzpatrick and Iseberg splitting the other half. (App. 87- 88, 90-91) The agreement was formalized in a contract dated March 8, 2002 concerning 1the product liability action. (App. 88) The final agreement came a few days later, when the Hills hired Allen & Associates for all purposes in connection with injuries and damages arising out of an incident which occurred on or about the 6 day of December 1999, in the th State of Indiana, on the following terms and conditions:
1. Counsel will devote their full professional abilities to this case and, in return, Client agrees to cooperate fully with Counsel … Client has also been advised of, and consents to, a 50%-50% fee-sharing arrangement by and between Attorney David Fitzpatrick and the undersigned counsel pertaining to all fees earned as a result of any verdict or settlement derived from Client’s medical malpractice, negligence and/or product’s liability claim(s). (App. 91) (emphasis added) Allen faxed this retainer agreement to Fitzpatrick on April 2, 2002, and mailed it that day also, enclosing an executed copy of the agreement dated In Appellant’s Appendix, the date of the retainer agreement between the Hills and Allen 2 is mistakenly listed as December 6, 1999. (App. i) While that date is handwritten on the agreement, it refers to the date that John Hill underwent surgery leading to his injuries. (App. 145) Fitzpatrick’s brief develops a lengthy and irrelevant non-sequitur: Allen’s suspension 3 from the practice of law in Indiana for a period of 90 days prior to the onset of depositions in the products case. (Br. 7-9) While a 90-day suspension was later reciprocally imposed in Illinois, neither suspension prevented Allen & Associates from continuing to work on the Hill matter and only prevented Ken Allen himself from doing so for the specified period.
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March 8, 2002. (App. 90-91) While not noting the final retainer agreement encompassing 2 all claims between the Hills and Allen, Fitzpatrick accurately describes the global nature of the agreement between Fitzpatrick and Allen as to the 50/50 sharing all fees between Fitzpatrick and Allen, while Fitzpatrick undertook responsibility for the products lawsuit in Illinois and Allen for the malpractice action in Indiana. (Br. 7)
Action on two fronts
During the next two years, Allen & Associates and Fitzpatrick and Iseberg proceeded to work as agreed: Fitzpatrick pursued discovery in the products case while Allen & Associates undertook a medical malpractice administrative claim against the physicians. (App. 116, Csicsko v. Hill, supra, 808 N.E.2d 80) The physicians sought a preliminary 3 court determination that the hospital’s release in the prior settlement applied to them and that the settlements as to the hospital and the patient compensation fund totaling $1.25 million was the maximum the Hills could receive under the Indiana Medical Malpractice Act. Id. Allen defeated that effort. (Id.) In affirming the trial court’s decision which allowed the Hills’ additional claims to proceed, the appellate court on March 24, 2004, concluded that “a genuine issue of material fact exists as to whether the injuries Hill suffered, including the loss of many limbs, the failure of multiple organs, and the necessity of having to undergo
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several surgeries, constituted separate injuries from separate acts of malpractice under the Medical Malpractice Act.” Id. at 84. The physicians sought transfer, which was denied on July 8, 2004, enabling the Hills to proceed with seeking multiple recoveries on their medical malpractice claim. Csicsko v. Hill, 822 N.E.2d 968 (Ind. 2004).
Settlement approaches, Fitzpatrick proposes new deal
While the transfer petition was before the Indiana Supreme Court, Fitzpatrick was working out a settlement of the products case he had filed in federal court in Illinois on behalf of the Hills. (App. 165) On June 2, 2004, Allen wrote Fitzpatrick, noting their conversation of the day before and “the prospect of settlement on the horizon in the products case.” Allen also discussed arguments the medical malpractice defendants would likely invoke to use the products case settlement to defeat recovery in the medical malpractice case, and concluded that “we are pretty much where we started on the issue of our respective fee-shares.” (App. 156-157) Fitzpatrick responded on June 8, 2004, proposing to change the terms of their agreement. (App. 160-162) Instead of an equal division, he proposed to “set aside in an interest bearing account fifty (50%) of all fees received in the products case up to a maximum amount of $555,555″ towards payment of Allen’s fees in the medical malpractice action. (Id.) Allen responded by fax that day, proposing to escrow all fees from the products and medical malpractice cases for future division when the cases are concluded. (App. 163) Though Fitzpatrick later swore that he “did not counsel the Hills to terminate Mr. Allen from the product liability action” (App. 564), the next day, June 9, 2004, the Hills sent Allen a letter, notifying him that “effectively immediately … we have terminated you and your firm
Lewis and Conseco both requested the court to order disclosure of the settlement 4 amount on August 19, 2004. (App. 172-174) On Sept. 14, 2004, Conseco also moved to vacate
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as our legal counsel relative to the products action against the pharmaceutical companies responsible for the injuries suffered by us in this matter in December of 1999. Please note that this termination does not apply to the medical negligence action that you and your firm are prosecuting on our behalf in Indiana.” (App. 164) On June 29, 2004, the federal court entered the stipulation of dismissal of the products case. (App. 165-166)
Litigation ensues over fees
Meanwhile, on November 25, 2003, Lewis filed a complaint in Porter Superior Court accusing Fitzpatrick of wrongfully inducing John Hill to terminate Lewis as his attorney as to the product liability claims. (App. 126) Lewis’s complaint sought a lien for attorney’s fees and named several other defendants, namely Allen, Allen & Associates and John Hill, and Conseco Life Insurance Company, which had a subrogation lien for the cost of part of Hill’s medical care. (App. 125-130, 172) Lewis subsequently dismissed Allen as to any claims alleging tortious interference. (Supp. App. 1) Lewis served discovery on Fitzpatrick, seeking, among other things, the total amount of the settlement. (App. 204) On August 19, 2004, the court ordered Fitzpatrick and other defendants “to disclose all settlement amounts from the Illinois action on or before October 1, 2004, and the Court orders all parties to whom such amounts have been disclosed to treat them as, and they hereby are, confidential - not to be disclosed to anyone outside of the parties to this action.” (App. 171) (emphasis added) On October 5, 2004, the court denied Fitzpatrick’s motion to vacate the disclosure order and his motion to seek leave to file an interlocutory appeal. (App. 210) The next day, 4 the disclosure order, explaining that its subrogation interest had been satisfied and therefore it “no longer needs the Illinois action settlement amounts to be disclosed”. (App. 173) Lewis and Allen & Associates opposed Conseco’s motion to vacate the order, although Allen withdrew his opposition after receiving a letter dated Sept. 17, 2004 from Fitzpatrick asserting that it “is inconsistent with your fiduciary obligation to Mr. Hill in potentially compromising his ability to settle the Illinois action.” (App. 176, 202-203) However, the Illinois action was already dismissed, by the federal court’s order of June 29, 2004. (App. 165-166)
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Allen filed a cross-claim against Fitzpatrick, seeking recovery of attorney fees due from the settlement of the products case and for conversion of those funds. (App. 213) On November 23, 2004, Lewis notified the court of his decision to dismiss his tortious interference claims against Allen and his firm. (App. 26; Supp. App. 1-2) Seven days later, the court ordered Fitzpatrick to answer “fully and truthfully” the interrogatories, requests for admission and production requests propounded to him” by plaintiff and ordering the parties to keep the responses “in strictest of confidence” and not to be disclosed to third parties without the court’s permission. (App. 242) On December 10, 2004, the court ordered Fitzpatrick “to immediately disclose” the locations and amounts of settlement funds released to John Hill in the products case. (App. 28; Supp. App. 3)
Separation with Hills; default motions
Shortly thereafter, on December 22, 2004, the Hills asked Allen and his firm to withdraw as their attorneys in the case brought by Lewis, while remaining as their counsel in the medical malpractice case. (App. 243) In response, Allen notified the Hills of his withdrawal from the medical malpractice case as well, citing their “demonstrated unwillingness to follow our advice”. (App. 257) The court granted Allen & Associates’ motion to withdraw its appearance on behalf the Hills from the Lewis case on February 10, 2005. (App. 276) On December 30, 2004, Lewis moved for a default judgment against Fitzpatrick and
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Hill for repeated failures to obey orders compelling discovery. (App. 253) Allen later sought to join the motion, which the court took under advisement. (App. 264, 267) Meanwhile, Lewis settled his claim against Fitzpatrick, resulting in its dismissal on October 20, 2005. (App. 351) On May 4, 2005, Allen & Associates again sought to default David Fitzpatrick for his continued failure to obey the trial court’s disclosure orders of August 19, 2004 and thereafter. (App. 286-288) The court denied the motion. (App. 297) On June 24, 2005, Allen & Associates served discovery requests on Fitzpatrick seeking, among other things in interrogatory 25 and the corresponding document request, to learn the total amount of the settlement in the products case and to obtain the documents relating to the settlement. (App. 304, 318) On July 6, 2005, Fitzpatrick moved to stay discovery, pending mediation, or to extend time to respond to Allen’s discovery. (App. 298-300, 327) On July 25, 2005, the court denied Fitzpatrick’s motion for a stay, and granted Fitzpatrick to September 2, 2005 to respond to Allen’s discovery. (App. 329) On September 2, 2005, the court granted Allen & Associates’ motion to assert its cross-claim against Fitzpatrick, allowing it to relate back to October 6, 2004, the day it was filed; the court also denied Fitzpatrick’s pending motion to dismiss Allen & Associates’ claim on personal jurisdiction grounds, and it granted Fitzpatrick’s motion to seek leave to file an interlocutory appeal of the matter. (App. 345-347) The court further granted Fitzpatrick’s motion for a stay, pending the interlocutory appeal. (App. 350) On December 19, 2005, the Court of Appeals denied an interlocutory appeal. (App. 352)
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More delay
Noting the stay no longer was in effect, Allen & Associates on February 15, 2006 requested that Fitzpatrick fully respond to the outstanding written discovery on or before February 27, 2006 or be available for a T.R. 26(F) conference at 9 a.m. the next day. (App. 384) Citing scheduling conflicts, Fitzpatrick did neither, but agreed to discuss the matter on March 3, 2006 at 10 a.m., but was then unavailable when counsel for Allen & Associates tried to call him. (App. 385) Allen & Associates on March 6, 2006, filed its motion to compel the discovery responses. (App. 353-385) Fitzpatrick responded on March 10, asserting a mix-up in communications, and seeking an additional 30 days to respond to written discovery. (App. 386-397) On March 13, 2006, the court ordered Fitzpatrick to respond to the outstanding discovery (which included disclosure of the settlement amount) by April 10, 2006. (App. 389). Meanwhile, on April 7, 2006, Fitzpatrick filed suit in the U.S. District Court in Chicago, Cause No. 06-1989, raising as to his claims the same issues pending in this case. (Supp. App. 4-14) The action was dismissed the following summer. Fitzpatrick v. Allen, 2006 U.S. Dist. LEXIS 59643 (N.D. Ill. Aug. 23, 2006).
Non answers and default
On April 10, 2006, Fitzpatrick served discovery responses consisting of extensive
objections and minimal information. (App. 390-407) As to settlement amount, which the
trial court first ordered disclosed under confidentiality strictures on August 19, 2004,
Fitzpatrick answered:
Objection, seeks to invade the attorney-client privilege. Additionally, the
information is protected by the confidentiality agreement reached in the
settlement of Hill’s product liability case.
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Counsel for Allen & Associates attempted to speak to Fitzpatrick’s counsel to resolve
the discovery dispute, but again he was unavailable. (Supp. App. 15) Allen & Associates
then on April 13, 2006 filed its third motion to default Fitzpatrick for his refusal to cooperate
in discovery or adhere to this Court’s orders. (App. 408-412) On the same day, Fitzpatrick
again moved for a stay, arguing that Iseberg is a necessary party and that the case he filed
in federal court in Chicago should proceed on comity grounds. (App.45, 60-61)
On June 5, 2006, the trial court rejected Fitzpatrick’s bid for a stay, and granted default
against him. (App. 60-63) As to the stay, the court found that “Iseberg’s presence or
absence will not increase or decrease Allen’s claim to 50% of the total fees” and noted that
it had previously ruled that Iseberg is not a necessary party. (App. 61) The court further
rejected Fitzpatrick’s comity argument, finding, “Fitzpatrick is unreasonably burdening the
judicial system of Illinois by asking us to adjudicate issues (as they apply to him) that are
identical to the issues in this case.” (Id. at 62) (parenthesis in original)
At a hearing on Allen & Associates’ default motion, Fitzpatrick’s counsel argued that
he would disclose the amount of the settlement if the court ordered him to do so. (App.
434-435) In ordering default, the court noted its original order of August 19, 2004, requiring
disclosure of the settlement amount under confidential conditions to the parties by October
1, 2004, and continued:
Allen has attempted to obtain the settlement amount from Fitzpatrick on
multiple occasions after the Order was rendered. Then, in the eleventh hour,
after Allen filed its Motion for Default Judgment, Fitzpatrick answered the
interrogatories but did so by objecting to the question regarding the
settlement amount. Fitzpatrick objected to disclosure of the settlement
amount based upon relevancy and privilege. These objections were
overruled by the aforementioned Order on August 19, 2004. In all respects,
we are back to square one.
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It is not necessary for this Court to dilute the efficacy of its discovery powers
by allowing a party to force this Court to render duplicate orders to comply
in hopes that the party will begin to take this Court seriously. Therefore,
based on this Court’s discretion and Fitzpartrick’s continued refusal to
comply with this Court’s discovery process, Allen’s Motion for Default
judgment is GRANTED.
(App. 62-63)
Disclosure after default, entry of judgment
On June 9, 2006, Allen & Associates filed a motion noting that the amount due under
the default judgment could not be ascertained until Fitzpatrick disclosed the settlement
amount of the products case, and asking the court’s assistance by directing Fitzpatrick to
disclose the amount within 14 days or face monetary sanctions of 10 percent of the total
liquidated damages for each day that Fitzpatrick continued to defy the court’s orders. (App.
447-449) Also, Allen & Associates scheduled twelve out-of-state depositions for June 28,
2006 concerning the settlement of the products case, serving valid subpoenas and
tendering proper witness fees to each of the deponents. (Supp. App. 17-63)
On June 16, 2006, Allen & Associates was contacted by Maja Eaton, counsel for one
of the pharmaceutical companies who were defendants in the products liability case.
(Supp. App. 64-66) Ms. Eaton, on behalf of all counsel for the pharmaceutical companies,
agreed to supply cross-plaintiff with the requested information immediately upon the entry
of an Agreed Protective Order that would apply in the Allen/Fitzpatrick litigation in federal
court as well as in Porter Superior Court. (Id., Supp. App. 67-74) Other than specifically
requiring Allen to maintain confidentiality and mediate and not staying the case pending
mediation, the order was parallel to the agreed order previously signed by Lewis and
Fitzpatrick and previously entered by the court. (Supp. App. 67-70; App. 281-284) Both
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orders required,
1. Any document produced or obtained by any party during discovery that
sets forth or contains any ‘confidential information’ shall be stamped by the
party producing it with a notation that it is “confidential.”
(Supp. App. 69, App. 283) In a disclosure served by mail on the parties on June 27,
2006 and filed with the court, Fitzpatrick stated that the products case settled for $8.1
million. (App. 469-470 The disclosure filed by Fitzpatrick was not stamped confidential, as
required by the agreed protective order signed by Fitzpatrick and entered by Judge Alexa.
(App. 281-284, 283, ¶ 1, App. 469)
On June 29, 2006, Allen & Associates moved for entry of judgment, seeking liquidated
damages of one half of the entirety of the one-third fee on the products case on his count
for breach of contract, along with treble damages under the conversion count. (App. 472-
473) In a supporting legal memorandum seeking entry of judgment and filed August 4,
2006, Allen & Associates waived its claims to any unliquidated damages, seeking only
$1.35 million in liquidated damages – 50% of the attorneys fees in the product case – for
which, it argued, no hearing was necessary. (App. 492-497) At the hearing that day on
Fitzpatrick’s motion to vacate the default, Allen also explicitly waived the claim to treble
damages on grounds of conversion, and the court stated at the end of the hearing that
default was awarded only as to the contract claim. (App. 535, 538-539) Fitzpatrick
submitted a brief to the court on August 17, 2006, and a supplemental brief on July 22,
2008 in opposition to Allen & Associates motion for judgment in the amount of $1.35 million
in liquidated damages. (App. 540, 547) On July 24, 2008, the court entered judgment for
the $1.35 million. (App.64) Fitzpatrick filed his combined T.R. 59 and 60(B) motion for relief
from judgment on August 25, 2008 (App. 570), along with accompanying exhibits, including
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Fitzpatrick’s affidavit, containing facts that were not previously before the trial court. (App.
563, Supp. App. 94) Allen & Associates responded on September 12, 2008, addressing
arguments of quantum meruit measure of damages, the fairness of the process, and
liability which Fitzpatrick asserts were not contested and waived. (Supp. App. 79, 88-93,
Br. 47-50) Allen also moved to strike Fitzpatrick’s affidavit and other exhibits as improper.
(Supp. App. 94)
SUMMARY OF ARGUMENT
Fitzpatrick’s argument is founded on a number mis-assumptions and untrue
conclusions of law and fact. First, it incorrectly concludes that the Hills were able to
unilaterally modify the terms of their agreement with Allen & Associates by firing the firm
as to the products case while retaining it as to the medical malpractice case. Given that
Allen & Associates’ responsibility was always as to the medical malpractice case alone, this
attempted modification only had one ostensible effect – to prevent the firm from collecting
its agreed upon attorneys fees in the products case. Second, it concludes that Galanis v.
Lyons & Truitt, 715 N.E.2d 858, 860 (Ind. 1999), would not recognize the validity of an
agreement between attorneys to share fees equally where the agreement had been
approved by the clients and did not affect the amount the clients would receive in a
contingency fee case; Galanis shows otherwise.
Third, Fitzpatrick’s argument concludes that Allen & Associates did nothing of
consequence on the Hills’ medical malpractice case, despite the firm’s success on appeal
in enabling the Hills to seek multiple recoveries under the Indiana Medical Malpractice Act.
Fourth, it assumes that Fitzpatrick cannot be held liable for Allen’s share of the fees that
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Fitzpatrick kept for himself and distributed to others. Fifth, it concludes that a damages
hearing must be held even when the amount of damages is liquidated by contract.
Sixth, Fitzpatrick’s argument assumes that Fitzpatrick’s breach (established by the
default as well as his actual repudiation of the contract with Allen by keeping and
concealing the attorneys fees in the products action) did not release Allen from any
subsequent duty to Fitzpatrick to continue working the Hills’ medical malpractice action.
Seventh, it assumes that the trial court lacked discretion to sanction Fitzpatrick with default
after the attorney defied repeated court orders to disclose the products case settlement.
Finally, the argument incorrectly asserts that Allen & Associates did not address issues of
liability, of quantum meruit, the application of Galanis v. Lyons & Truitt, 715 N.E.2d 858
(Ind. 1999), and the fairness of judgment on liquidated damages without holding a hearing.
ARGUMENT
I. The trial court properly entered a default judgment against Fitzpatrick, and
found him to be in breach of his contract with Allen & Associates.
Standard of Review
Indiana courts limit their review of the entry of a default judgment to abuse of
discretion. Boles v. Weidner, 449 N.E.2d 288, 290 (Ind. 1983), citing Siebert Oxidermo,
Inc. v. Shields, 446 N.E.2d 332, 340 (Ind. 1983). “The trial court’s discretion is necessarily
broad in this area as any determination of excusable neglect must turn upon the unique
factual background of each case. No fixed rules or standards have been established as the
circumstances of no two cases are alike. … An abuse of discretion is an erroneous
conclusion and judgment, one clearly against the logic and effect of the facts or the
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reasonable, probable deductions to be drawn therefrom.” Id. (citations omitted.)
A. The trial court properly exercised its discretion in ordering default.
Judge Alexa acted within his discretion in defaulting Fitzpatrick after nearly two years
of Fitzpatrick’s refusal to abide by court orders requiring him to disclose the settlement
amount in the products action. (App. 171, 242, 329, 401, Supp. App. 3) Fitzpatrick justified
his non-compliance by asserting the confidentiality of the settlement agreement. (See e.g.
App. 185, Answer to No 22, App. 207) But from the outset, and subsequently, the court
had ordered the parties to maintain the confidentiality of the settlement amount. (App.171,
242) Fitzpatrick’s justification of seeking to maintain confidentiality was hollow, and
ultimately ignored by Fitzpatrick himself when he publicly disclosed the settlement amount
without the required confidential stamp. (App. 281, 469)
1. Fitzpatrick repeatedly disobeyed orders of the court.
On four separate occasions, the court ordered Fitzpatrick to disclose the settlement
amounts:
*Order of August 19, 2004, including the requirement that the parties keep
the settlement amount confidential. (App. 171)
*Order of November 30, 2004, that Fitzpatrick answer “fully and truthfully” -
and confidentially to the parties in this litigation only – Lewis’s discovery,
seeking, among other things, the settlement amount. (App. 242);
*Order of December 10, 2004 that Fitzpatrick “immediately” disclose the
locations and amounts of the settlement funds. (App. 28, Supp. App. 3); and
*Order of March 13, 2006, compelling Fitzpatrick to respond to Allen’s
discovery (including disclosure of the settlement amount in the underlying
case) by April 10, 2006 (App. 3, 401).
While Fitzpatrick finally submitted a response to the interrogatory, he did so with a non-
answer, objecting that the interrogatory “seeks to invade the attorney-client privilege” and
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that “the information is protected by the confidentiality agreement reached in the settlement
of the Hill’s product liability case.” (App. 401)
2. Lesser sanctions were not required.
Having denied two prior default motions, Judge Alexa granted default after Fitzpatrick’s
continued intransigence over a span of nearly two years, finding,
Allen has attempted to obtain the settlement amount from Fitzpatrick on
multiple occasions after the Order was rendered. Then, in the eleventh hour,
after Allen filed its Motion for Default Judgment, Fitzpatrick answered the
interrogatories but did so by objecting to the question regarding the
settlement amount. Fitzpatrick objected to disclosure of the settlement
amount based upon relevancy and privilege. These objections were
overruled by the aforementioned Order on August 19, 2004. In all respects,
we are back to square one.
It is not necessary for this Court to dilute the efficacy of its discovery
powers by allowing a party to force this Court to render duplicate orders to
comply in hopes that the party will begin to take this Court seriously.
Therefore, based on this Court’s discretion and Fitzpatrick’s continued
refusal to comply with this Court’s discovery process, Allen’s Motion for
Default judgment is GRANTED.
(App. 62-63)
Under the totality of the circumstances, this ruling cannot be reasonably characterized
as an “erroneous conclusion and judgment, one clearly against the logic and effect of the
facts or the reasonable, probable deductions to be drawn therefrom.” Boles, supra, 449
N.E.2d at 290.
Fitzpatrick argues lesser sanctions could have sufficed, though the court concluded
otherwise, quoting Foote v. Baltimore & Ohio R. Co., 465 N.E.2d 219 (Ind.App. 1985),
“Although extreme sanctions for discovery should rarely be utilized, they are appropriate
where imposition of a lesser sanction would merely add to the innocent party’s frustration
and delay.” (App. 62) After repeated disclosure orders and incessant battles the same false
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issue, the court was unwilling to abide by further frustration and delay.
T.R. 37(B) allows such sanctions “as are just” including “rendering a judgment by
default against a disobedient party”. Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349, 351
(Ind. 2005) Here, the default ordered by the court was just, given Fitzpatrick’s continued
refusal to obey court orders and disclose the amount of settlement to Allen & Associates
– a disclosure that was central to Fitzpatrick’s contractual duty to share the fees generated
by the products case with Allen & Associates.
The court explained in Nesses v. Specialty Connectors Co., 564 N.E.2d 322, 327 :
Indiana does not require trial courts to impose lesser sanctions before
applying the ultimate sanction of dismissal or default judgment. Burns v. St.
Mary Medical Center (1987), Ind. App., 504 N.E.2d 1038; Mulroe, supra. This
is especially true when the disobedient party has demonstrated
contumacious disregard for the court’s orders, “and the conduct of that party
has or threatens to so delay or obstruct the rights of the opposing party that
any other relief would be inadequate.” Whitewater Valley Canoe Rental, Inc.
v. Franklin Cty. Bd. of Commissioners (1987), Ind. App., 507 N.E.2d 1001,
1008, trans. denied.
3. False rationalizations underlaid Fitzpatrick’s contumacious disregard.
The repetitious and false nature of Fitzpatrick’s arguments that he could not disclose
the settlement amount because it would violate the agreed order of confidentiality entered
in Hill v. Baxter was, in itself, contumacious. Had Fitzpatrick given due regard to the court’s
first and subsequent orders (App. 171, 242), he would have recognized that it required the
parties to keep the settlement information confidential. Instead, Fitzpatrick chose to
disregard that part of the order. It did not fit his effort to conceal the information because
he wished to avoid paying 50 percent of the $2.7 million attorney fee to Allen, as he was
contractually required to do.
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In addition to its order of August 19, 2006, the court entered a parallel agreed order on
April 12, 2005, requiring any party disclosing confidential information to stamp the
document “confidential”. (App. 283-284) Yet, when after default and after the defendants
in the Baxter case made clear their willingness to confidentially disclose the settlement
amount, Fitzpatrick failed to abide by the order that he stamp the document disclosing the
amount as “confidential”. (App. 469) Fitzpatrick knew from the outset that disclosure was
required to be confidential; that he finally violated even this requirement underscores the
contemptuous nature of his continual disregard of the court’s orders.
B. Fitzpatrick breached his contract with Allen.
1. Default establishes breach by Fitzpatrick.
“The effect of a default is the admission of those matters properly averred in the
complaint.” Centex Home Equty Cor. V. Robinson, 776 N.E.2d 935, 948 (Ind. Ct. App.
2002). Allen & Associates’s cross-claim asserted that the firm had performed all its
obligations under the contract with Fitzpatrick, diligently prosecuted the Hills’ case from
pre-trial discovery through an appeal, when Fitzpatrick breached the contract by settling
the product liability action and not remitting the fees due Allen & Associates under the
contract. (App. 213-215)
2. Fitzpatrick, in fact, breached his contract by repudiating key terms.
These averments, indeed, are also supported by the facts of record, which show that
while Allen was working the Hills’ medical malpractice action, as he had agreed, Fitzpatrick
repudiated his contractual obligation to pay to Allen 50 percent of the attorneys fees
generated by the products action. By failing to remit those fees to Allen & Associates, and
by concealing the fees, Fitzpatrick took positive actions that repudiated the contract. See
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e.g. Ralph E. Koressel Premier Elec., Inc. v. Forster, 838 N.E.2d 1037, 1045 (Ind. Ct. App.
2005). Thus, Fitzpatrick materially breached the contract, entitling Allen & Associates to
damages for total breach. Id., Restatement (2d) Contracts § 243.
II. The trial court properly awarded contract damages for the breach.
Standard of Review
The trial court determined damages in this case based on the language of the contract
between Fitzpatrick and Allen, providing for a 50-50 split of attorneys fees in both the
products liability and medical malpractice cases. De novo review applies to interpretation
of contracts. Smith v. Gary Pub. Transp. Corp., 893 N.E.2d 1137, 1138 (Ind. Ct. App.
2008). Allen agrees that de novo review also applies to the issue of the the measure of
damages under Galanis v. Lyons & Truitt, supra.
A. Fitzpatrick’s breach established his obligation to pay contract damages.
Allen & Associates is entitled to collect the money due it under the contract at the time
that Fitzpatrick breached it. “A party injured by a breach of contract may recover the benefit
of the bargain.” Berkel & Co. Contrs., Inc. v. Palm & Assocs., 814 N.E.2d 649, 658 (Ind.
Ct. App. 2004), citing INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 577 (Ind. Ct.
App. 2003), trans. denied.
Here, the bargain was simple. Under its contract with Fitzpatrick, Allen & Associates
was entitled to 50 percent of the fees from the products liability action after it was settled.
Fitzpatrick admits that the trial court’s entry of a $1.35 million judgment against Fitzpatrick
amounted to exactly half of the $2.7 million in fees generated by the products case. (Br.
4)
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“The cardinal rule in the interpretation of contracts is to ascertain the intention of the
parties, as expressed in the language used, and to give effect to that intention, if it can be
done consistent with legal principles.” Evansville-Vanderburgh School Corp. v. Moll, 264
Ind. 356, 362, 344 N.E.2d 831 (1976), quoting Walb Construction Co. v. Chipman, (1931)
202 Ind. 434, 441, 175 N.E. 132 (1931). Fitzpatrick admits that under the contract, 50
percent of the attorneys fees were to go to Allen, and “the other 50 percent going to
Fitzpatrick and Iseberg, which they would split equally.” (Br. at 7). Here, the intention of the
parties in this appeal as to the division of fees as provided by their contract is both clear
and admitted.
B. Fitzpatrick’s quantum meruit argument misinterprets Galanis, wrongly
assumes the Hills could unilaterally amend the contract they approved,
and ignores the consequences of Fitzpatrick’s breach.
Fitzpatrick’s reliance on Galanis is misplaced. Galanis recognized that if the former and
current lawyers agreed between themselves how to split fees, that agreement should be
put into effect rather than a quantum meruit balancing analysis. Id., supra, 715 N.E.2d at
860. That is the case here.
Also, Fitzpatrick’s quantum meruit argument fails to recognize that the Hills hired Allen
& Associates as to all their claims – the medical malpractice claim as well as the products
claim – arising from the medical malpractice in December 1999 that resulted in John Hill
losing three limbs and suffering failure of multiple organs. (App. 91) It wrongly assumes the
Hills could unilaterally amend the contract by terminating Allen’s services as to the products
case alone, while keeping him as to the medical malpractice action. Because the Hills
could not so amend the contract, they did not terminate Allen, and the quantum meruit
analysis discussed in Galanis does not apply. On that score, also, Allen & Associates is
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entitled to the benefit of its bargain to split with Fitzpatrick the one-third contingency fee
paid by the Hills in the products case. (App. 87-88)
That Allen & Associates terminated its representation of the Hills at a point after the
settlement of the products case makes no difference. (App. 257) Once the products case
was settled and judgment entered, Allen & Associates was entitled to its share of the fees
from it. Farmer v. Lawson, 855 N.E.2d 686 (Ind. Ct. App. 2006) Also, Fitzpatrick’s prior
breach of his agreement with Allen & Associates cut off any duty that Allen & Associates
had to Fitzpatrick to continue to perform under its contract with the attorney. While
quantum meruit analysis may apply to determine fees owing to Allen & Associates in the
medical malpractice action (and Fitzpatrick may seek to claim a share of those fees), Allen
& Associates’ interest in the products case is established by the prior judgment and the
terms of its contract with Fitzpatrick.
1. Under Galanis, the lawyers’ agreement controls.
Fitzpatrick’s reliance on Galanis fails to recognize that the measure of damages is set
by the contract between Fitzpatrick and Allen & Associates. In Galanis, no contract existed
between the attorneys as to how to divide the contingency fee. Rather, the former attorney
and the current attorney were each seeking a separate contingency fee recovery from the
client. The Indiana Supreme Court found that piling on of such fees would chill a client’s
right to terminate his lawyer, and concluded that the lawyers would have to share the single
contingency fee. It found that the discharged attorney and the current attorney were each
entitled to recover the value of his services rendered as measured by quantum meruit or
their individual contribution to the ultimate result.
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Quantum meruit analysis was necessitated in Galanis by the lack of an agreement
between the discharged attorney and the settling attorney as to how they would split the
fee. Without such an agreement, the court would have to weigh various factors in an effort
to determine the value of each attorney’s contribution to the final result and to thus reach
a just apportionment. Such weighing is not a scientific process, as the court recognized,
since the general quality of the work and the risk of failure, along with time spent, are
factors to consider in determining how the fee should be split. Id. at 862. However, the high
court also found that the determination of the attorneys’ relative contribution to the result
could be simply resolved on a contractual basis: “If both lawyers agree that the time spent
by each was productive, that will provide an easy resolution of the issue.” Id. (emphasis
added) In other words, the lawyers then would simply split the contingency fee generated
by the judgment based on how many hours each attorney put into the matter to reach a
just apportionment.
Thus, Fitzpatrick is wrong in asserting, “Nowhere in its opinion in Galanis did the
Supreme Court indicate that its holding was in any way based on the fact that the feuding
lawyers did not have a fee-sharing contract.” (Br. at 32). To the contrary, the court signaled
that an agreement between the attorneys would avoid the extensive balancing act
necessitated by a quantum meruit analysis: if the lawyers agreed their time was equally
valuable to the client, they would divide the contigency fee based upon how many hours
each had put in, without worrying about which attorney had achieved more. In this case,
the agreement between the attorneys addresses, and rightfully determined, the just division
of the attorneys fees.
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Here the lawyers agreed to equally split fees generated by both the products liability
and the medical malpractice cases, and separately to split their responsibilities by the case.
(App. 87-88, 90-91) They, too, under the reasoning of Galanis, are entitled to the benefit
of their bargain made with each other. In citing Hofreiter v. Leigh, 124 Ill. App. 3d 1052;
465 N.E.2d 110 (Ill.Ct.App. 1984), Fitzpatrick does not show that Illinois law is any
different. In Hofreiter, the attorneys had agreed to split the fees and the work in a case on
a 50/50 basis, but then one of the lawyers moved to California, and the deal was off. The
court then looked to quantum meruit to determine how the fees should be divided. Because
of the one lawyer’s move, the court recognized the deal could no longer remain. That’s not
the case here.
Galanis addressed “default settings the law supplies in the absence of fee agreements
providing otherwise” and specifically noted that “parties and lawyers are not prevented from
making other reasonable fee arrangements.” Galanis, 715 N.E.2d at 860. Here, the
attorneys specified how they would share attorneys fees, and the clients approved the
attorneys’ agreement, knowing, in any event, the division of those fees would not affect
how much money the Hills themselves received. Nothing in Galanis requires a quantum
meruit analysis by the trial court of numerous intangible factors where the attorneys have
agreed to a simple split of the fee – a split that in no way would affect how much in fees
the client would have to pay.
Furthermore, Galanis addresses the situation where an attorney is fired by the client
before a contingency fee case results in a judgment. Here, Allen & Associates was not, in
fact, terminated before judgment was entered in Hill v. Baxter. This is another fundamental
flaw in Fitzpatrick’s argument that damages must be determined under a quantum meruit
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analysis rather than under the simple terms of the contract
2. The Hills could not amend the contract to fire Allen on the products
case alone.
Fitzpatrick and Allen agreed from the outset that Fitzpatrick would handle the products
case and Allen the medical malpractice case, and equally split the fees from both actions,
with Iseberg’s share coming from Fitzpatrick’s half. This division of responsibility remained
exactly the same after the Hills purported to terminate Allen & Associates from the
products case. Fitzpatrick and Allen continued to work on their respective individual cases
in representing the Hills just as they had agreed to work in the beginning. That Fitzpatrick
was not responsible for prosecution of the medical malpractice action and Allen &
Associates was not responsible for the prosecution of the products liability action does not
undermine their agreement to share fees as to the two actions involving the universe of the
claims of their clients. In Freeman v. Mayer, 95 F.3d 569 (7th Circuit 1996), the court
upheld a fee splitting arrangement even though the Illinois lawyer who referred the action
and participated in other ways did not enter an appearance in the Indiana action.
Because Allen & Associates never had responsibility for prosecuting the products case
portion of its clients’ claims, the supposed termination had no effect on the firm’s work for
the Hills. The Hills retained Allen & Associates as to all their claims, while approving their
attorneys’ agreement to share the fees from the separate cases arising from those claims.
(App. 91) While the Hills remained free under Galanis to terminate Allen & Associates
altogether, they were not free to retain the firm, while amending their global retainer
agreement to simply cut Allen & Associates out of its entitlement to fees in the products
case, which was about to be settled. The law against such one-sided amendment of a
Fitzpatrick never made a record prior to judgment of the amount paid to Lewis, though
5
he subsequently sought to do so in an improper affidavit and exhibits, which Allen moved to
strike. (Supp. App. 94-98) (see discussion below)
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contract is straightforward:
A party to a contract may not make unilateral changes to a contract. While
parties may voluntarily enter into and modify contracts, such modifications,
which are also contracts, require all the elements of a contract. Henthorne
v. Legacy Healthcare, Inc., 764 N.E.2d 751, 759 (Ind. Ct. App. 2002)
Stelko Electric, Inc. v. Taylor Community Schools Building Corporation, 826 N.E.2d
152,159 (Ind. Ct. App. 2005); See also, State ex rel. Court Goldsmith v. Marion County
Superior, 275 Ind. 545, 554 (Ind. 1981). Having not first obtained Allen’s agreement to
divide fees by case rather than share fees equally as to both the medical malpractice and
the products liability cases, neither the Hills nor Fitzpatrick were in a position to unilaterally
impose such a change.
Fitzpatrick has not, and cannot, point to any evidence showing that after retaining
Allen & Associates for all purposes, the Hills and Allen & Associates reached a new
agreement under which the Hills were free to restrict that representation. Without such an
agreement, the unilateral attempt by the Hills to amend their contract and terminate Allen
& Associates from the products case alone at the cusp of its settlement, was ineffective.
3. Percentage of fees not challenged.
Fitzpatrick does not challenge the total percentage and amount of fees the Hills agreed
to pay in the products case. He can hardly do so since he admits he took the fees, and
distributed half to Iseberg after a settlement share was distributed to Lewis. (Br. 10, 13-14)5
Fitzpatrick simply seeks to avoid having to pay Allen’s share under their contract, arguing
that quantum meruit analysis must apply. But, as discussed, the contract between
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Fitzpatrick and Allen, approved by the Hills, remained valid at the time the products case
was settled since the Hills could not amend it to simply deprive Allen of fees from that
case.
Under these circumstances, aside from issues of default, the trial court must look to
the contract, not to a quantum meruit analysis. “The existence of a valid express contract
for services . . . . precludes implication of a contract covering the same subject matter. The
rights of the parties are controlled by the contract and under such circumstances recovery
cannot be had on the theory of quantum meruit.” Page v. Schrenker, 439 N.E.2d 694, 697
(Ind. Ct. App. 1982) (upholding contracted attorneys’ fees), and quoting Kincaid v. Lazar,
405 N.E.2d 615, 619 (Ind. Ct. App. 1980).
C. Allen & Associates was entitled to the benefit of its bargain.
1. The firm performed under the agreement through the time of breach.
For two years, Allen & Associates lived up to its side of the bargain with Fitzpatrick and
the Hills, aggressively pursuing the medical malpractice litigation and winning an appeal
enabling John Hill to seek multiple capped recoveries in it due to his multiple injuries
involving separate instances of malpractice. Csicsko v. Hill, supra, 822 N.E.2d 968. While
Fitzpatrick was preparing to settle the products case, Allen & Associates was opposing
transfer of the medical malpractice matter to the Indiana Supreme Court – an effort that
proved successful. Comparing Allen’s efforts to Fitzpatrick’s in pursuing discovery in the
products case would not be a simple task. But no comparison is necessary or appropriate.
The attorneys agreed by contract that they would divide the work by case, and split the
fees from both cases equally. (App. 87-88, 90-91)Because the contract governs, no need
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exists to move to a quantum meruit analysis.
2. Fitzpatrick played wait and see before invoking equitable relief.
Had Fitzpatrick believed the 50/50 contractual split of fees in both the products and the
medical malpractice cases was somehow unfair, he could have sought to change the terms
of the deal long before the products case was about to settle. He did not do so. Instead,
he let Allen work the medical malpractice case during two years of litigation concerning the
critical issue of whether the Hills could recover multiple maximum recoveries allowed under
the Indiana Medical Malpractice Act for the multiple injuries he sustained to organs and
loss of limbs. Then, when the products case was about to settle for an amount of money
far greater than the medical malpractice case was expected to generate, even with multiple
caps, Fitzpatrick tried to persuade Allen to change the terms of their deal, and upon Allen’s
rejection of the proposal, the Hills signed a letter dated the next day purporting to terminate
Allen from the products case alone. (App. 160-166) The timing of the supposed termination
makes suspect Fitzpatrick’s claim that he had nothing to do with it, made in his improperly
filed post-judgment affidavit. (App. 564 ¶
In any case, Fitzpatrick’s decision to let Allen & Associates prosecute the medical
malpractice action for two years under the fee sharing agreement should preclude him
from asserting quantum meruit as the grounds for not having to live up to his end of the
bargain. Quantum meruit is an equitable remedy. Galanis, supra, 715 N.E.2d at 861. It is
not appropriate to apply in a situation where the party invoking it sat on his hands, playing
wait and see, before using it to justify his unilateral decision that he had no duty to live up
to his contract, or for that matter, to obey court orders that he disclose the total amount of
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the settlement. He who seeks equity must do equity, and must come with clean hands.
Wedgewood Cmty. Ass’n v. Nash, 810 N.E.2d 346, 347 (Ind. 2004); Wilt v. Bueter, 186
Ind. 98, 113 (Ind. 1916).
3. Allen & Associates was entitled to share in the products case fees
under contract terms.
Because Allen & Associates remained counsel to the Hills at the time of the settlement
of the products case, the firm was entitled to its share of the fees from that case, even
though Allen subsequently terminated his relationship with the Hills. In Farmer v. Lawson
supra, 855 N.E.2d at 692-693, the agreement between the attorneys to equally share the
contingency fee in a wrongful death case remained in effect at the time of verdict, and, thus
the 50-50 split was given effect, even though one of the attorneys was subsequently
dismissed by the client. The principle of giving force to the agreement on division of fees,
where such exists, rather than imposing a quantum meruit construction by the courts was,
as discussed, approved in Galanis and has long been recognized in Indiana courts. See
Landis v. Brooks, 637 N.E.2d 1365, 1367 (Ind. Ct. App. 1994) (“It has long been the law
that the existence of a valid express contract for services . . . precludes implication of a
contract covering the same subject matter. The rights of the parties are controlled by the
contract and under such circumstances recovery cannot be had on the theory of quantum
meruit.” quoting Page v. Schrenker, Ind.App., 439 N.E.2d 694, 697 (Ind. Ct. App. 1982),
in turn quoting Kincaid v. Lazar, 405 N.E.2d 615, 619 (Ind. Ct. App. 1980))
That Allen & Associates subsequently withdrew as the Hills’ attorneys does not negate
its right to its 50 percent share of the fees collected by Fitzpatrick and Iseberg. The
contingency causing the fees to be owed had already occurred. Farmer v. Lawson, supra,
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855 N.E.2d at 692-693. Furthermore, as discussed in detail below, Fitzpatrick already had
breached the contract, giving Allen the right vis-a-vis Fitzpatrick to discontinue performance
under it. This is a separate issue from that of whether Allen & Associates properly withdrew
as counsel for the Hills in the medical malpractice case. In fact, given the Hills’s efforts to
unilaterally amend the terms of their contract and deprive Allen of fees in the products case
and their efforts to terminate Allen as to the products and the Lewis actions, the firm was
justified in its subsequent termiantion of its relationship with the Hills.
Thus, under Galanis, Allen & Associates will be entitled to a fee from the medical
malpractice case – and because the firm had no contract regarding division of the fees with
the new attorney accepting the case – the division of fees will be made on a quantum
meruit basis. Under his contract with Allen, Fitzpatrick can then make claim to 50 percent
of those fees paid to Allen & Associates in the medical malpractice case. But, in contrast
to the products case, that is a contingency that has yet to occur. Fitzpatrick already has
collected fees in the products case and, under his contract with Allen & Associates, owes
50 percent to Allen & Associates.
D. Allen’s subsequent withdrawal does not defeat his claim to contractual
damages arising from Fitzpatrick’s prior breach.
Fitzpatrick lacks grounds to deny Allen’s fees in the products case based on Allen &
Associates’s subsequent withdrawal from the medical malpractice case. In contracts law,
it is well established that breach of the contract by one party relieves the other party from
completing its remaining duties. “A party’s material failure of performance, including
defective performance, will act as the non-occurrence of a condition of the other party’s
remaining duties, even if such other party is unaware of the failure.” Salin Bank & Trust Co.
An exception occurs where the only remaining duties of performance are those of the
6
party in breach and are for the payment of money. Id. Since, prior to Fitzpatrick’s breach, Allen
owed continuing duties, this exception is not applicable.
-31-
v. Peden Trust, 715 N.E.2d 1003, 1008 (Ind. Ct. App. 1999), citing RESTATEMENT
(SECOND) OF CONTRACTS § 235 cmt. a, 237 cmt. c. As the Restatement puts it,
it is a condition of each party’s remaining duties to render performances to
be exchanged under an exchange of promises that there be no uncured
material failure by the other party to render any such performance due at an
earlier time.
Id. § 237. Here, Fitzpatrick did not carry out his contractual duty to share the fees in
the products case with Allen & Associates. He repudiated their contract by insisting that
Allen be paid based upon the fees generated by the medical malpractice action, and by
concealing the products case fee despite Fitzpatrick’s agreement with Allen & Associates
and despite repeated court orders that he disclose the amount to Allen. Under these
circumstances, Allen & Associates had no duty to Fitzpatrick to continue representing the
Hills in the medical malpractice case.
By refusing to share the fee in the products case, and by concealing it, Fitzpatrick did
not merely provide defective performance, he repudiated the contract to share fees. Under
Restatement of Contracts § 243 (2), “a breach by non-performance accompanied or
followed by a repudiation gives rise to a claim for damages for total breach.” Applying this
6
principle in the context of insurance, the court explained in Colonial Life & Acci. Ins. Co.
v. Newman, 152 Ind. App. 554, 284 N.E.2d 137 (Ind. Ct. App. 1973):
“Indiana decisional law dictates that where liability has attached under a
contract of insurance, but where liability has been denied by the insurer, the
insured may treat the contract as repudiated and may pursue his remedy to
recover all that is due him in a single suit on a lump-sum basis. Prudence
Life Ins. Co. v. Morgan (1966), 138 Ind. App. 287, 213 N. E. 2d 900; Illinois
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Bankers Life Ass’n. v. Armstrong (1934), 100 Ind. App. 696, 192 N. E. 901.”
….
an action for total future benefits may be maintained where there has been
a total breach of performance. In such instance the contract will be said to
have been repudiated. Corbin, CONTRACTS (1951), § 969. Thus, if the
insurer’s denial of liability goes “to the essence” of the agreement and
amounts to a “frustration of the ends it was expected to subserve,” the
contract may be treated as repudiated, good faith and good intentions of the
insurer notwithstanding. New York Life Ins. Co. v. Viglas (1936), 297 U.S.
672, 56 S. Ct. 615.
Colonial Life, 152 Ind. App. at 561-562, and quoting in part from prior decision at 284
N. E. 2d 137.
Here, the essence of the agreement between Fitzpatrick and Allen & Associates was
the equal sharing of fees from both the products liability and the medical malpractice
actions, along with the division of responsibilities by case. When Fitzpatrick frustrated that
end by concealing the settlement in the products case and not sharing the fees it
generated with Allen & Associates, he was in total breach of the contract, and Allen &
Associates was entitled to the 50 percent of fees to which it was contractually due.
III. Ethical rules do not preclude Allen’s recovery.
The Indiana Rules of Professional Conduct “are not designed to be a basis for civil
liability, but these Rules may be used as non-conclusive evidence that a lawyer has
breached a duty owed to a client.” IRPC Scope.
A. No rules were violated.
The arrangement by Allen & Associates and Fitzpatrick to share fees met the mandate
of INDIANA R.PROF’L CONDUCT 1.5(e) that:
A division of a fee between lawyers who are not in the same firm may be
made only if:
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(1) the division is in proportion to the services performed by each lawyer or
each lawyer assumes joint responsibility for the representation;
(2) the client agrees to the arrangement, including the share each lawyer will
receive, and the agreement is confirmed in writing; and
(3) the total fee is reasonable.
Fitzpatrick does not dispute that the Hills agreed in writing to the 50/50 fee sharing
arrangement. Nor does he dispute the total contingency fees that the Hills agreed to pay
with respect to the products liability and the medical malpractice litigation. Thus, neither
section (e)(2) nor (e)(3) of Professional Conduct Rule 1.5 is at issue.
1. Allen’s fee was proper under the alternative prongs of Rule 1.5(e)(1)
As to first clause of Rule 1.5 section (e)(1), Fitzpatrick has failed to show that the fee
division was not proportional to the attorneys’ work when all the clients’ claims are
considered. By putting on blinders to focus solely on the work done in the products case,
Fitzpatrick seeks to ignore his agreement to divide responsibility but share fees as to both
the products and the medical malpractice cases. Furthermore, the agreement between
Fitzpatrick and Allen & Associates met the second, alternative clause of section (e)(1) in
that each lawyer assumed “joint responsibility for the representation” of the Hills. Here,
Fitzpatrick and Allen & Associates did exactly that even though they logically split their
responsibilities, with Fitzpatrick responsible for the products case in Illinois and Allen
responsible for the medical malpractice case in Indiana. Fitzpatrick fails to cite any rule or
case prohibiting such division of responsibilities. Rule 1.5(e)(1) does not require that each
lawyer assume joint responsibility for each aspect of the representation, or, for that matter,
each case. Fitzpatrick builds his argument though ignoring the totality of the
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representation, and focusing solely on the products case.
2. Neither Allen nor Fitzpatrick were required to appear as counsel of
record in the case to be handled by the other.
No rule required Allen’s appearance as an attorney of record in the products case. In
Freeman v. Mayer, supra, 95 F.3d 569, the court upheld the 50/50 split fee sharing
agreement between the referring Illinois attorney and the Indiana counsel who took sole
responsibility for litigating the case. The court noted that William Freeman, the Illinois
attorney who referred the case to Indiana attorney Richard Mayer as Freeman was about
to retire to North Carolina, had conducted an extensive pre-litigation investigation into the
case, and had maintained contact with his clients while the case was pending. Freeman
was not admitted pro hac vice to work the Indiana case with Mayer, who won an $8 million
verdict after extensive litigation in which Freeman did not participate. After a jury verdict
totaling $8 million, Mayer negotiated an about $4.7 million settlement in the underlying
case, but did not notify Freeman of it. After eventually learning of the settlement through
his clients, Freeman inquired, and Mayer sent him a one-third fee. Freeman objected,
Mayer stopped payment on the check and asserted that the fee-sharing arrangement with
Freeman violated Rule 1.5 of the Indiana Rules of Professional Conduct. Freeman filed a
diversity lawsuit in federal court, asserting that Mayer had violated their contact. Mayer
asserted the violation of rule 1.5 as a defense. The district court granted summary
judgment to Freeman, and the Seventh Circuit affirmed, concluding:
Freeman did nothing unusual: he took a case for old friends, he associated
himself with local counsel when it appeared that court proceedings in another
jurisdiction would be required, and he reduced his agreement both with his
client and his co-counsel to writing. Mayer, it appears, simply had second
thoughts when the case came out favorably and tried to improve the terms
-35-
of his arrangement with Freeman ex post. Nothing in the Indiana Rules of
Professional Conduct either required or permitted this behavior.
Id. at 576. Thus, the fact that Freeman was not officially counsel in the Indiana case
did not prevent him from sharing in the fee proceeds as he had agreed with Mayer.
This case is in many respects parallel. Fitzpatrick, like Mayer, agreed to share fees with
co-counsel on a 50-50 basis. There was a rough proportionality of work since Fitzpatrick
and Allen divided up their total responsibilities by case. (In Freeman, the court found that
the division of work might have met the separate proportionality test of Rule 1.5(e)(1),
though noting this was a factual matter not appropriate for summary judgment.) Fitzpatrick,
like Mayer, failed to disclose the $8 million settlement to Allen (and then, in addition,
refused to obey repeated court orders requiring him to disclose it). Fitzpatrick, like Mayer,
argues violations of the ethics rule in an effort to avoid his contractual obligations.
3. The totality of representation must be considered.
Fitzpatrick, like Mayer, also seeks to have the court ignore the attorneys’
representation of their clients as to work done on the totality of their claims. Specifically,
Fitzpatrick argues he is entitled to the entire fee in the products case because Allen &
Associates represented the Hills in the medical malpractice action, not the products case;
but his interpretation assumes the rule requires representation by each attorney in each
case of a client’s total claim. This is an issue the rule does not address, but which
effectively was rejected by the court in Freeman.
B. The ethics rules are not to be used as procedural weapons.
The Seventh Circuit in Freeman cited a preamble/scope provision of the Professional
Conduct Rules, and questioned a lawyer’s standing “to nullify a fee-sharing agreement that
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violated Rule 1.5(e)(1), since the lawyer-parties to the agreement do not appear to have
interests that are legally protected by this rule.” Freeman, at 575.
Here, too, Fitzpatrick raises this rule that is designed to protect clients in an effort to
defend his own refusal to pay the 50 percent contracted fee that he agreed to pay to Allen
& Associates, not to question the fees that the Hills were obliged to pay the attorneys. This
case is solely about how the agreed upon and undisputed attorneys fees in the products
case are to be divided between the attorneys. The Hills themselves have no financial
interest in the outcome.
As the Indiana Supreme Court explains in the “scope” section of the Professional
Conduct Rules, “the purpose of the Rules can be subverted when they are invoked by
opposing parties as procedural weapons”. Here, Fitzpatrick seeks to add a non-existent
requirement (that the “representation” must be as to each particular lawsuit rather than the
totality of the client’s case) to Rule 1.5(e)(1) to challenge Allen & Associate’s contractual
right to the agreed upon sharing of fees. But the Professional Conduct Rules were never
meant to be so used.
IV. The trial court properly awarded liquidated damages.
A. No hearing was required.
Under T.R. 55(B) the trial court had the discretion to determine whether a hearing was
needed to make the damages calculation. Where the calculation is simple, no hearing is
necessary. Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319,
1323 (7th Cir. Ill. 1983) (no hearing required where the amount claimed is liquidated or
capable of ascertainment from definite figures contained in the documentary evidence);
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Mallard’s Pointe Condo. Ass’n v. L&L Investors Group, LLC, 859 N.E.2d 360, 365 (Ind. Ct.
App. 2006) (no hearing necessary to assess damages respecting default judgment where
plaintiff had notified defendant of monthly water usage rate).
Allen & Associates moved for entry of judgment based on liquidated damages under
the contract, and both sides briefed the issue, with Fitzpatrick submitting a supplement in
addition to his response brief. (App. 471-473), 489-491, 540-543, 547-553). Given the
simplicity of the contract between Fitzpatrick and Allen & Associates as to division of fees,
the trial court did not err in determining that no hearing was necessary and awarding Allen
& Associates $1.35 million, or half the attorneys fees arising from the settlement of the
products case as provided by the contract. (App. 87-88)
B. Fitzpatrick improperly sought after the judgment to raise new evidence
concerning the Lewis settlement and other matters.
Subsequent to that judgment, Fitzpatrick submitted his own affidavit asserting that
Lewis had been paid $600,000 in settlement of his claim, along with additional documents
outside the record that Allen identified. (App. 554-569; Supp. App. 94) No evidence of the
settlement amount with Lewis was before the trial court when it entered judgment on the
contract. (See Br. 13, n. 71, citing only the affidavit at App. 565 ¶ 13 as the evidence of the
settlement.) Allen moved to strike the affidavit and other non-record evidence Fitzpatrick
sought to introduce in conjunction with his combined T.R. 59 and T.R. 60(B) motion (App.
570; Supp. App.94-98).
To prevail on a motion to correct error based on newly discovered evidence, Fitzpatrick
needed to demonstrate that the evidence could not have been discovered and produced
at trial with reasonable diligence. T.R. 59(A)(1); Matzat v. Matzat, 854 N.E.2d 918, 919
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(Ind.App.2006); Laudig v. Marion County Bd. of Voters Registration, 585 N.E.2d 700, 712
(Ind.Ct.App.1992). This he did not and could not do. Fitzpatrick’s own averments in his
affidavit regarding prior events show the contrary to be the case since he claimed personal
knowledge of the matters. (App. 563-568)
T.R. 59(H)(1) affidavits and other exhibits cannot be used to present evidence that a
party neglected to present during the previous proceedings. Mid-States Aircraft Engines,
Inc. v. Mize Co., Inc., 467 N.E.2d 1242, 1245 (Ind.App.1984); see also; Babinchak v. Town
of Chesterton, 598 N.E.2d 1099 (Ind.App.1992) (trial court properly struck photographs of
sidewalk appended to plaintiff’s motion to correct errors following grant of summary
judgment for town; photographs were not newly discovered evidence and were in existence
before plaintiff’s deposition was taken and well before hearing on summary judgment
motion). As the court stated in Patton v. State, 537 N.E.2d 513, 516 (Ind. Ct. App. 1989):
T.R. 59(H)(1) allows a party to disclose, on the record matters constituting
a basis for correction of error which occurred during the prior proceedings,
but were not reflected in the record. The provision also permits the disclosure
of newly discovered evidence. It does not, however, allow a party to offer by
affidavit, evidence which he merely neglected to submit at the prior
proceeding.
(citations omitted; emphasis added)
B. Fitzpatrick failed to plead setoff.
Furthermore, while Fitzpatrick’s payment of fees to Lewis in settlement might have
provided him with the affirmative defense of set-off, Fitzpatrick did not plead such a
defense. Setoff is an affirmative defense which must be pled under T.R. 8(C). By failing
to include this affirmative defense in his Answer, Fitzpatrick waived the issue. Cox v. Town
of Rome City, 764 N.E.2d 242, 249 (Ind. Ct. App. 2002) (“Any affirmative defense that a
In the event the Court determines that the payment to Lewis should have been
7
considered, the case could be remanded with instructions to re-enter the judgment, subtracting
one half of that payment from Allen’s recovery. See Landis v. Brooks, supra, 637 N.E.2d at
1368.
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party seeks to assert must be included in the pleadings when a responsive pleading is
necessary. Ind. T.R. 8(C); Paint Shuttle, Inc. v. Continental Cas. Co., 733 N.E.2d 513, 525
(Ind. Ct. App. 2000), trans. denied. Failure to do so results in waiver, even if the affirmative
defense is not listed in those defenses enunciated in T.R. 8(C). Paint Shuttle, Inc., 733
N.E.2d at 513.”)
Had Fitzpatrick not waived the affirmative defense of setoff by failing to raise it in his
answer and failing present evidence of payment to Lewis before judgment, the trial court,
if it agreed that setoff was allowed, could have simply determined the amount of fees Allen
& Associates was due as a matter of liquidated damages under the contract. Separate
payment to Lewis does not create any new rationale for imposing a quantum meruit
analysis over how the remaining fees should be distributed when the terms of the contract
provided that 50 percent should go to Allen & Associates.7
D. Under T.R. 19, Allen is entitled to recovery from Fitzpatrick alone.
Without citing any supporting authority, Fitzpatrick argues that Allen must sue Iseberg
separately for half the money. (Br. 37-39) But Fitzpatrick admits he distributed fees to
Iseberg.(Br. at 10, 13-14) Under the contract as to the products liability case, Allen &
Associates was entitled to 50 percent of the total attorneys fees, and Iseberg and
Fitzpatrick were to share the remaining 50 percent. (App. 87, 88) When he had the
settlement funds in hand, Fitzpatrick was, thus, obliged to distribute half the money to Allen
& Associates. Instead of fulfilling this contractual duty, Fitzpatrick opted to split the fees
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with Fitzpatrick.
Indiana T.R. 19(E)(1) provides:
Joint obligors. Joinder of all the parties to a joint and several obligation and
to a joint obligation, shall not be required, and joint or separate action may
be brought against one or more of such obligors who shall be subject to
permissive joinder as provided in Rule 20. A judgment against fewer than all
does not merge or bar the claim against those not made parties for that
reason.
While the rule contemplates the possibility of a separate action in the event the
judgment cannot be satisfied, it recognizes the validity of the judgment as to a single
obligor. Here, Fitzpatrick, Iseberg and Allen were each bound by the agreement to share
fees. Fitzpatrick breached his obligation in distributing fees due Allen to Iseberg. As a
matter of equity, and in accord with the terms of the fee sharing contract, Allen is entitled
to recover the entirety of his fees from Fitzpatrick. The trial court was correct in concluding
that Iseberg was not a necessary party and that his “presence or absence will not increase
or decrease Allen’s claim to 50% of total fees.” (App. 61)
V. Fitzpatrick’s T.R. 60(B) argument must fail for reasons discussed above and
for failure of evidence of waiver.
A trial court’s grant or denial of a T.R. 60(B) motion is reviewed for abuse of discretion.
Mallard’s Pointe Condo. Ass’n, supra, 859 N.E.2d at 365-366.
Fitzpatrick argues that he presented a meritorious defense on three grounds in his T.R.
60(B) motion for relief from judgment and citing his claims that: 1) applying Galanis and
given the payment to Lewis, the damage award was prima facie excessive; 2) the judgment
without a hearing on damages was prima facie unfair; and 3) liability is prima facie in doubt
because Allen had no entitlement to quantum meruit recovery of fees in the products case,
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and particularly with respect to Allen’s conversion claim. However, Fitzpatrick only includes
his motion rather than his brief seeking T.R. 60(B) relief, and the motion does not detail
these arguments, to which Allen & Associates purportedly did not respond. (App. 570) In
fact, Allen & Associates did address the substantive arguments in his response brief, thus
overcoming any prima facia argument Fitzpatrick may have made. (Supp. App. 79, 88-93)
See Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006) (“When the appellee
has failed to submit an answer brief we need not undertake the burden of developing an
argument on the appellee’s behalf. Rather, we will reverse the trial court’s judgment if the
appellant’s brief presents a case of prima facia error.”)
The issues are addressed above, and are re-adopted by reference in this section so
as to avoid needless repetition. As noted, Allen expressly waived the conversion claim in
oral argument (App. 535), and Judge Alexa stated that conversion was not part of the
default judgment. (App. 539) In fact, the judge simply awarded liquidated damages based
on the contract, and thus, Fitzpatrick’s argument as to conversion (Br. 50-53) is not
relevant.
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CONCLUSION
WHEREFORE, Appellee Kenneth J. Allen & Associates, P.C. requests this court affirm
the decision of the trial court.
Respectfully submitted,
KENNETH J. ALLEN & ASSOCIATES, P.C.
Kenneth J. Allen (3857-45)
William Lazarus (24638-64)
WORD COUNT CERTIFICATE
I verify this brief contains no more than 14,000 words.
_________________________________
William Lazarus (24638-64)
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CERTIFICATE OF SERVICE
The undersigned affirms that the foregoing Appellant’s Brief was served this 23rd day
of April, 2009, on all counsel of record by United States mail with sufficient first-class
postage affixed.
_______________________________
William Lazarus (24638-64)
Brian J. Paul, Esq.
Jenny R. Wright, Esq.
ICE MILLER, LLP
One American Square, Suite 3100
Indianapolis, IN 46282-0200
Kevin E. Steele, Esq.
BURKE COSTANZA & CUPPY LLP
9191 Broadway
Merrillville, IN 46410
: ALLEN LAW BUILDING
1109 Glendale Boulevard
Valparaiso, IN 46383
219.465.6292
G CHASE BANK CENTER
8585 Broadway, 8 Floor
th
Merrillville, IN 46410
219.736.6292
G CHARTER ONE BANK
17450 South Halsted St.
Homewood, IL 60430
708.799.6292
G SMURFIT-STONE BUILDING
150 North Michigan Ave.
Chicago, IL 60606
312.236.6292
Refer to Office Indicated