Good Faith Settlement Tested in Illinois Appellate Court

On July 31, 2008, a multi-car collision occurred in which the car driven by Gregory Mlot rear-ended the vehicle in front of him driven by Michael Dervin. Wendy Palacios was a passenger in Dervin’s car. It was alleged that the Dervin vehicle then rear-ended the vehicle in front of him, a Jeep driven by Lavita Gayle.

Palacios filed a lawsuit for her injuries against Mlot, his employer, DMD Services, and Dervin. Dervin then filed a lawsuit for his injuries against Mlot and DMD Services. The cases were consolidated.

In the answer filed by Mlot and DMD Services, they raised affirmative defenses of Dervin’s contributory negligence.

Mlot brought a third-party complaint for contribution against Dervin. Finally, in October 2011, Dervin moved for a good-faith finding of settlement with Palacios and asked for dismissal with prejudice of the third-party action against him. Mlot and DMD opposed the motion. They said that the settlement between Dervin and Palacios was collusive. However, the trial judge granted the motion of a good-faith finding and settlement, and the case was dismissed. Mlot and DMD appealed.

It was argued by these defendants that the settlement did not satisfy the good faith requirements under the Illinois Joint Tortfeasor Contribution Act. It was maintained that Dervin settled without a consideration by the court of his potential liability.

In the appellate court’s decision, it cited Wreglesworth ex. rel. v. Arcto Inc., stating that the factor to be considered by a trial court when considering a settlement was made in good faith should include whether the amount of the settlement was reasonable and fair, whether the parties had a close personal relationship, whether the parties sued the settling party and whether information about the settlement agreement was concealed.

The appellate court found that Dervin and Palacios, although co-workers and occasional carpoolers, did not directly work together and did not socialize outside work. Further, Palacios did bring suit against Dervin. The appellate court panel stated that the mere fact that a settlement agreement would be advantageous to a party is not necessarily an indication of bad faith.

The court also stated that a disparity between the amount of the settlement and the amount of damages sought by the plaintiff is also not an indicator of bad faith. Illinois courts have declined to use a proportionality or the reasonable test in order to evaluate the good faith and nature of a settlement.

There was not enough evidence to support the claim that Dervin was the primary cause of the crash. Therefore, it was not unreasonable for the amount of his settlement with Palacios to be low in comparison to the total amount of damages sought in the lawsuit.

Accordingly, the Illinois Appellate Court affirmed the approval of the good-faith finding of settlement in this case.

Wendy Palacios v. Gregory Mlot and DMD Services and Michael Dervin, 2013 IL App. (1^st) 121416 (June 21, 2013).

Kreisman Law Offices has been handling automobile cases, truck accident cases and nursing home abuse cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 37 years in and around Chicago, Cook County and its surrounding areas, including Calumet City, Palatine, Park Ridge, Park Forest, Forest Park, Chicago (East Chatham), Chicago (Lincoln Square), Rolling Meadows, Skokie and Bridgeview, Ill.