Find Legal Information

1-01-4518)                                                                                                                                                                                  FOURTH DIVISION
1-02-2797)                                                                                                                                                                                  JULY 31, 2003
1-02-2831) Cons.

JUSTICE HARTMAN delivered the opinion of the court:

These appeals consider the propriety of a circuit court good-faithsettlement finding in a subrogation setting. The unique circumstances of theappeals involve an insurer that issued a policy containing language which providedcoverage not only for its principal insured, one of the settling parties, butcaused the circuit court, post-settlement, to declare the same insurer the primaryinsurer also of the second settling party.⁽¹⁾ Prior to the settlement, the insurerrecognized coverage for the principal insured, which previously had been found bya jury the less culpable party in an independent action, settled the claim madeby the principal insured under the policy, then sued the more culpable party insubrogation (for which it was later declared the primary insurer) and accepted asignificantly reduced amount of damages in settlement from the more culpableparty, for which settlement it secured the good-faith finding. In doing so, itdeprived a third party from pursuing potentially meaningful contribution from themore culpable party. For reasons which follow, we reverse and remand in each ofthe three appeals taken in this case.⁽²⁾

The controversy emanates from property damage claims following the crash ofa private, corporate owned aircraft at Palwaukee Municipal Airport (Palwaukee) onOctober 30, 1996. In the first appeal (docket number 1-01-4518), PalwaukeeMunicipal Airport Commission, village of Wheeling and city of Prospect Heights(collectively the Municipalities) challenge a November 20, 2001 circuit courtorder, making the good-faith finding in a $6 million "Release and SettlementAgreement" (Settlement) between defendants, Aon Aviation, Inc. (sometimes AonAviation) and Aon Corporation (collectively Aon Defendants) and its insurers,United States Aviation Underwriters (USAU) and United States Aircraft InsuranceGroup (USAIG), and plaintiffs, Alberto-Culver Company (Alberto), Alberto's primaryinsurer, Associated Aviation Underwriters, Inc. (AAU) and the above-named separateinsurers (collectively Alberto Insurers) (good-faith appeal).

The Municipalities argue that the circuit court erred by granting AonDefendants' motion for a good-faith finding because (1) it ignored the onlyevidence presented at the evidentiary hearing; (2) the Municipalities met thegoverning preponderance of the evidence standard; and (3) the Settlement violatesthe terms and purpose of the Joint Tortfeasor Contribution Act (740 ILCS 100/0.01et seq. (West 2002) (Contribution Act)) and does not satisfy four prerequisitesnecessary to establish good-faith. The Municipalities also contend that theSettlement does not represent a reasonable share of Aon Defendants' tortliability, because Aon Defendants were found 90% liable and Alberto 10% liable forthe accident in a separate wrongful death action not involved in this appeal, andthe settling parties concealed all information regarding the terms of Settlement. In addition, the Municipalities assert that the court erred by refusing to allowdiscovery and failing to compel compliance with Supreme Court Rule 237 (166 Ill.2d R. 237 (Rule 237)) notices before finding an alleged grossly disparatesettlement to be in good-faith.

In their second appeal (docket number 1-02-2797), the Municipalities contestthe denial of their motion for relief of judgment under Code of Civil Procedure(Code) section 2-1401 (735 ILCS 5/2-1401 (West 2002) (section 2-1401)), whichdisputed the good-faith finding, contending that their section 2-1401 motionpresented new information that was unavailable at the time the good-faith findingwas entered. The Municipalities point to a January 11, 2001 letter in which AAUadmitted the true value of the hull coverage claim was $12 million instead of $28million.⁽³⁾ The Municipalities argue that Aon Defendants cannot obtain agood-faithfinding on its Settlement because Alberto was the principal insured on AAU'spolicy, and AAU became Aon Defendants' primary insurer by virtue of an August 6,2002 circuit court ruling.⁽⁴⁾ The Municipalities claim that allowing the good-faithfinding to stand would have a devastating effect on public policy of insurancecoverage matters.

The third appeal (docket number 1-02-2831) involves the Municipalities'contention that the circuit court erred by denying their motion to stay theoutstanding subrogation proceedings until the determination of the good-faithappeal because its August 6, 2002 finding that AAU is Aon Defendants' primaryinsurer establishes that the Alberto Insurers, having settled with their owninsured, Alberto, stands in Alberto's shoes and should not be allowed to apportioncompeting interests of both Alberto and Aon to the detriment of third parties; asa result, the Municipalities cannot secure a fair contribution allocation via athird-party complaint against Aon Defendants, who have insulated themselves frompaying their fair share of liability by the alleged good-faith settlement.

The issues presented for review include whether circuit court abused itsdiscretion by: (1) finding that the Settlement was executed in good-faith; (2) denying the Municipalities' motion for relief from judgment under Code section 2-1401; and (3) denying the Municipalities' motion to stay the subrogationproceedings pending the appeal of the good-faith finding.

Docket Number 1-01-4518 Appeal

On October 30, 1996, a Gulfstream GIV (GIV) aircraft owned and operated byAlberto crashed upon takeoff from Palwaukee, resulting in the deaths of all fourpersons aboard, including chief pilot and captain for Aon Aviation, Martin LarryKoppie; Robert Hampton Whitener, pilot and captain for Alberto; Arthur Quern,chief executive officer and chairman of the board for Aon Risk Management, Inc.;and Catherine Mio Anderson, a flight attendant employed by Executive Jet, whoseservices were secured by Aon Aviation. The airplane was destroyed by impact andfire. The flight was conducted pursuant to an Interchange Agreement, whichpermitted Aon Defendants and Alberto to utilize each corporation's GIV uponoccasion. Aon Defendants and Alberto agreed, inter alia, to (1) "hold harmlessand indemnify the other from loss, expense, damages, claims or suits which theymight suffer as a result of any act or omission of the other party"; (2) maintainoperational control of their own GIV during use by the other party; and (3)purchase an aircraft insurance policy with a minimum $150,000,000 value to providecoverage when piloting each other's airplanes. At the time of the accident, AonAviation operated Alberto's GIV for the business interests of Aon Defendants. Theaccident resulted in the initiation of multiple causes of action for wrongfuldeath and survival, declaratory judgment and subrogation.

The circuit court consolidated for discovery and trial the wrongful deathand survival actions brought by the four decedents' estates against variouscombinations of defendants, including Alberto, Aon Defendants, and theMunicipalities. Whitener's estate alleged that Koppie was at fault for theaccident and that Aon Defendants failed to train and instruct adequately itspilots concerning procedures in mixed crew situations. Koppie's estate allegedthat Whitener was at fault and also claimed negligence against Alberto and theMunicipalities. Alberto and Whitener's estate filed counterclaims and third-partyclaims for contribution and contractual indemnity under the Interchange Agreementagainst Aon Defendants. Aon Defendants filed a counterclaim against Alberto forcontribution and contractual indemnity pursuant to the Interchange Agreement. AonDefendants and Alberto, however, did not file a counterclaim against theMunicipalities.

On May 24, 1999, the circuit court granted summary judgment in favor of theMunicipalities pursuant to the Illinois Local Governmental and GovernmentalEmployees Tort Immunity Act (745 ILCS 10/1-101 et seq. (West 2002) (Tort ImmunityAct)). The estates of Koppie and Quern, and Alberto appealed that decision, whichwas reversed and remanded for trial on December 7, 2000. See Anderson v. Alberto-Culver USA, Inc., 317 Ill. App. 3d 1104, 1117, 740 N.E.2d 819 (2000). The supremecourt denied the Municipalities' petition for leave to appeal. Anderson v.Alberto-Culver USA, Inc., 194 Ill. 2d 565, 747 N.E.2d 351 (2001).

The consolidated causes of action proceeded to trial on November 14, 2000,but did not include claims asserted against the Municipalities. Prior to verdict,the Anderson and Quern estates entered into settlement agreements with Alberto andtheir causes of action were dismissed. Alberto retained their contribution andthird-party claims against Aon Defendants for those settlements. On January 23,2001, the jury returned a verdict in favor of the Whitener estate and against"Aon" in the amount of $21,051,943, which was reduced by 10% for Whitener'scontributory negligence to $18,946,749. The circuit court entered judgment on theverdict on January 24, 2001. The order stated that the jury rendered a verdictagainst "Aon Corporation" and declared a mistrial as to any and all remainingcauses of action, including the Koppie estate's claim and all claims forcontribution "by and between Alberto-Culver USA Inc. and Aon Aviation Corp." andcontractual indemnity in the Interchange Agreement "by Aon Corporation aka [sic]Aon Aviation Corp. against Alberto-Culver, USA, Inc." With respect to thedeclaration of mistrials, the order was corrected to remove Aon Corporation fromthe cross-action for contribution and include Aon Aviation for the contributionand contractual indemnity actions.

On July 12, 2001, the circuit court granted Alberto's emergency motion tocorrect the record and ordered nunc pro tunc that judgment be entered on the juryverdict in favor of Whitener's estate and against Aon Aviation. The orderdeclared mistrials in all remaining causes of action, found that naming AonCorporation as the party against whom judgment was entered on January 24, 2001,was a clerical error and that the January 24 order was void and of no effect. Another July 12, 2001 order dismissed Aon Corporation with prejudice and withoutcosts, nunc pro tunc, as of November 28, 2000. Aon Defendants appealed.

On March 6, 2003, this court affirmed the judgment of the circuit court, andfound, inter alia, that the trial was conducted fairly and properly and that AonDefendants had waived and were estopped from any attempt to draw a distinctionbetween their two corporate entities in order to create a procedural advantage. Anderson v. Alberto-Culver USA, Inc., 337 Ill. App. 3d 643, 661, 668, 789 N.E.2d304 (2003).

In a related action pertinent to the instant appeals, the Alberto Insurersfiled a complaint for declaratory judgment and at law against Aon Defendants, USAUand USAIG on January 16, 1997, seeking to recover the $28 million they paid toAlberto for loss of the aircraft.⁽⁵⁾ No recovery was sought from the Municipalitiesin this action.

Aon Defendants filed a counterclaim against the Alberto Insurers andAlberto, seeking a declaration that Aon Defendants were entitled to coverage underAlberto's insurance policy, including indemnity of the declaratory judgmentaction. The Alberto Insurers responded to the counterclaim, but did not initiatea third party claim against the Municipalities.

On January 12, 2001, prior to the wrongful death jury verdict, TimothyMcSwain, a USAU representative, faxed a letter he received from AAU Senior VicePresident Sharon Holahan to Raymond I. Skilling of Aon Corporation. Holahan notedan existing question of whether USAU was the primary or excess insurer of AonDefendants and disputed Aon Defendants' argument that AAU is their primaryinsurer.

On January 24, 2001, following the rendering of the wrongful death juryverdict, a correspondence from Holahan to McSwain stated that AAU agreed to accept$6 million as settlement of the AAU/Alberto hull subrogation claim. Holahan alsonoted, "[t]his settlement will be final as to the hull only and the amount statedas a percentage or otherwise will have no bearing on other pending actions arisingout of this accident. If this amount to be paid is accepted by your company,there will not be any reimbursement by AAU/Alberto Culver for amounts recoveredfrom other parties including the municipality." USAU accepted AAU's January 24,2001 offer and agreed that it and USAIG would pay $4 million and that AonDefendants would contribute $2 million for the settlement.

On June 8, 2001, AAU and Alberto executed a "Full Release and SettlementAgreement" for the aircraft hull claim in accord with the settlement agreementpreviously reached between the parties. Aon Defendants and USAU, however, failedto pay the agreed settlement funds and, thereafter, AAU and Alberto moved toenforce the terms of the aircraft hull settlement.

On August 14, 2001, Aon Defendants moved for a good-faith finding anddismissal of the settlement agreement in order to extinguish any contributionclaims under the Contribution Act. Aon Defendants also pleaded that a good-faithfinding be extended to their insurers, USAU and USAIG. In addition, AonDefendants moved to enforce the aircraft hull settlement pursuant to a March 21,2001 release, alleging that they did not have an opportunity to provide theirobjections to AAU's proposed release.

On August 20, 2001, the Municipalities filed an emergency petition tointervene for the sole purpose of objecting to Aon Defendants' motion for a good-faith finding, claiming that an August 16, 2001 facsimile of an amended notice ofmotion for good-faith finding and dismissal from Aon Defendants was the firstattempted service of any notice with respect to the declaratory judgment action. The circuit court granted the Municipalities' petition. In support of theirexception to Aon Defendants' motion for good-faith finding and dismissal, theMunicipalities argued that (1) the court had no basis upon which to find that thesettling parties reached an agreement in good-faith because no settlement waspresented to the court; and (2) the proposed settlement agreements do not meet thegood-faith requirements of the Contribution Act. The Municipalities also movedfor enlargement of time and evidentiary hearing, which the Alberto Insurers andAlberto opposed.

Following a hearing on October 9, 2001, the circuit court denied theMunicipalities' motion for enlargement of time, but allowed an evidentiary hearingto establish the basis for their exceptions to Aon Defendants' motion for a good-faith finding. The Municipalities filed notices and revised notices to producepursuant to Supreme Court Rule 237 (166 Ill. 2d R. 237 (Rule 237)), requestingproduction of persons most knowledgeable of the negotiations leading up to theterms of settlement between the Alberto Insurers, Alberto, Aon Defendants, USAUand USAIG, ownership of the aircraft, responsibility for operation of the aircraftat the time of the accident, the verdict rendered in the wrongful death case, thedecisions of Alberto or its insurers to file subrogation claims and numerousdocuments related to the settlement agreement. The Municipalities also filed anemergency motion to compel discovery requests.⁽⁶⁾ Alberto and its insurers filed anemergency motion to quash the Municipalities' Rule 237 notices, which the courtgranted because the Municipalities' requests were "unparticularized andindiscreet." The Municipalities filed a second, revised notice to produce at theevidentiary hearing, which no party sought to quash.

On November 5, 2001, the Alberto Insurers, Alberto, Aon Defendants, USAU andUSAIG executed the Settlement, which required Aon Defendants to pay AAU $2 millionand USAU and USAIG to pay AAU $4 million. The Settlement released Aon Defendants,USAU and USAIG from "any liability, claims, demands, actions or causes of actionrelating to" the destroyed Alberto GIV as set forth in count I of AAU's thirdamended complaint in the declaratory judgment action.⁽⁷⁾

Following an evidentiary hearing on Aon Defendants' amended motion for good-faith finding and dismissal, the circuit court granted the motion and found thatthe Settlement was made in good-faith, thereby extinguishing any contributionliability of Aon Defendants for the matters released.⁽⁸⁾ The court also ordered thatcount I of AAU's fourth amended complaint against Aon Defendants be dismissed withprejudice, but that the declaratory judgment and subrogation action as to allother counts were not dismissed. In addition, the court included language in itsorder pursuant to Supreme Court Rule 304 (155 Ill. 2d R. 304). The Municipalitiesappeal the court's decision to grant Aon Defendants' motion for good-faith findingand dismissal.

Docket Number 1-02-2831 Appeal

In another cause of action pertinent to these appeals, the Alberto Insurersfiled a subrogation action against the Municipalities, seeking $28 million for theloss of the aircraft. The August 16, 2000 subrogation complaint did not includeAon Defendants as a party. The Municipalities sought leave to file a third-partycomplaint against Aon Defendants and Alberto for contribution, alleging that theyare liable for all or part of the Alberto Insurers' claims against theMunicipalities.

On January 29, 2002, Aon Defendants moved to dismiss the Municipalities'third-party complaint, alleging that any possible contribution liability to theMunicipalities for AAU's hull loss claim was extinguished by the November 20, 2001circuit court order granting Aon Defendants' motion for a good-faith finding. Inresponse to Aon Defendants' motion, the Municipalities stated that they adoptedand incorporated all arguments presented before the circuit court in the pendingappeal of the good-faith order and, therefore, Aon Defendants' motion to dismisswas not ripe for decision.

On August 6, 2002, the Municipalities moved to stay the subrogationproceedings pending appeal of the good-faith finding. The Municipalities arguedthat reversal of the circuit court's good-faith finding would render AonDefendants' motion to dismiss as moot.

On August 13, 2002, the circuit court denied the Municipalities' motion tostay and simultaneously granted Aon Defendants' motion to dismiss theMunicipalities' third-party complaint. The Municipalities timely appeal thecourt's August 13, 2002 order denying their motion to stay the subrogationproceedings pending appeal of the good-faith finding.

Docket Number 1-02-2797 Appeal

In filing their section 2-1401 motion, the Municipalities argued that, hadthe circuit court known certain recently discovered facts at the time of theNovember 20, 2001 evidentiary hearing, it would have denied Aon Defendants' motionfor a good-faith finding. The Municipalities first claimed an admission made bythe Alberto Insurers in the good-faith appeal that the Settlement would have beenin the amount of $12 million instead of $6 million if it were limited solely totort considerations, was new evidence. Aon Defendants were not aware of the factsdisclosed by the Alberto Insurers as set forth in their response brief from thegood-faith appeal. The Municipalities also noted an August 6, 2002 order enteredby the circuit court, which granted summary judgment in favor of USAU and foundthat "AAU's policy provides Aon Aviation, Inc. primary coverage relating to thedamages and claims plead herein." The Municipalities argued that, as a matter offact and law, AAU was the insurer of Aon Defendants when it sued Aon Defendantsfor declaratory judgment, subrogation and when the Settlement was executed. TheMunicipalities contended that an insurer should not be allowed to deny coverageto the more culpable of the two co-insureds and then subrogate and enter into areduced settlement agreement with the more culpable co-insured to protect that co-insured from a contribution claim by a third-party. The Municipalities appeal thedenial of their section 2-1401 motion.

Prior to addressing the merits of the instant appeals, Aon Defendants', theAlberto Insurers' and Alberto's (collectively movants) motion to strike theMunicipalities' statement of facts in their amended brief from the good-faithappeal will be addressed. Supreme Court Rule 341(e)(6) (188 Ill. 2d 341(e)(6)(Rule 341(e)(6))) provides that the statement of facts be stated "accurately andfairly without argument or comment, and with appropriate reference to the pagesof the record on appeal." Movants assert that the Municipalities' statement offacts are highly argumentative, listing numerous examples of improper comments. A review of the Municipalities' statement of facts shows that it is highlyargumentative, conclusional and, in numerous instances, states propositions offact unsupported by the record. Specifically, the Municipalities' principal brieflists bullet points as "facts," but are filled with argument and legalconclusions. Nevertheless, we elect to deny movants' motion to strike andadmonish the parties to read and follow Rule 341(e)(6) in future appeals.

The Municipalities initially assert that the circuit court erred by findingthat the Settlement was executed in good-faith, because the uncontrovertedevidence reveals that the Settlement was manufactured specifically to burden anonsettling party with a disproportionate allocation of liability. TheMunicipalities do not seek to have the Settlement invalidated; rather, they arguefor reversal only of the good-faith finding so that the Settlement will remain ineffect, thereby allowing them to seek contribution from Aon Defendants. Accordingto the Municipalities, reversal of the court's decision would fulfill the goalsof the Contribution Act because the amount they may recover from Aon Defendantspotentially would provide for an equitable distribution among tortfeasors.

Aon Defendants respond that the Municipalities have failed to prove by apreponderance of the evidence that the Settlement was not made in good-faith andthat the record is devoid of evidence demonstrating tortious or wrongful conductamounting to fraud or collusion by Aon Defendants. The Alberto Insurers andAlberto respond that the Municipalities failed to provide any evidence that theSettlement was not made in good-faith and, therefore, the circuit court properlygranted Aon Defendants' motion.

The determination that a settlement was executed in good-faith will not bedisturbed on appeal absent an abuse of discretion. McDermott v. MetropolitanSanitary District, 240 Ill. App. 3d 1, 44, 607 N.E.2d 1271 (1992). TheContribution Act provides a right of contribution "where 2 or more persons aresubject to liability in tort arising out of the same injury to person or property,or the same wrongful death," although judgment has not been entered against anyor all tortfeasors. 740 ILCS 100/2(a) (West 2002). "The right of contributionexists only in favor of a tortfeasor who has paid more than his pro rata share ofthe common liability, and his total recovery is limited to the amount paid by himin excess of his pro rata share. No tortfeasor is liable to make contributionbeyond his own pro rata share of the common liability." 740 ILCS 100/2(b) (West2002). The pro rata share of each tortfeasor is determined by his relativeculpability. 740 ILCS 100/3 (West 2002). Pertinent to the present case, theContribution Act states:

"[w]hen a release or covenant not to sue or not toenforce judgment is given in good-faith to one or morepersons liable in tort arising out of the same injury orthe same wrongful death, it does not discharge any of theother tortfeasors from liability for the injury orwrongful death unless its terms so provide but it reducesthe recovery on any claim against the others to theextent of any amount stated in the release or thecovenant, or in the amount of the consideration actuallypaid for it, whichever is greater." 740 ILCS 100/2(c)(West 2002).

Although the Municipalities argue that the Settlement fails to satisfy fourfactors establishing whether a settlement was made in good-faith, as articulatedin Wreglesworth v. Arctco, Inc., 317 Ill. App. 3d 628, 634, 740 N.E.2d 444 (2000),the recent supreme court decision, Johnson v. United Airlines, 203 Ill. 2d 121,133, 784 N.E.2d 812 (2003) (Johnson), is determinative of the outcome in thepresent case without necessitating application of these factors.

In Johnson, which involved the collision of two aircrafts on the runways ofan airport owned and operated by the city of Quincy (Quincy), the supreme courtreviewed the claim of Raytheon Aircraft Company (Raytheon), which argued that thecircuit court abused its discretion when it refused to allow discovery or conductan evidentiary hearing with respect to Quincy's relative culpability beforedeciding that a settlement agreement entered into by the administrators ofdecedents' estates and Quincy was made in good-faith. Upon belief that it wasimmune from all tort liability, Quincy maintained it nevertheless agreed to settlewith decedents' estates for a nominal amount to avoid the time and expense ofadditional litigation. Raytheon contended that, where the amount tendered in asettlement is nominal, resulting in a gross disparity between the settlementamount and claimed damages, a nonsettling party should be allowed to show that thesettlement amount bears no reasonable relationship to the settling party'srelative culpability.

The supreme court held that settling parties carry the initial burden ofmaking a preliminary showing of good-faith by establishing, at a minimum, theexistence of a legally valid settlement agreement. The court noted, however, thatnot all legally valid settlements satisfy the good-faith requirements of theContribution Act, citing Stickler v. American Augers, Inc., 325 Ill. App. 3d 506,511, 757 N.E.2d 573 (2001) (Stickler). Upon a preliminary showing of good-faithby the settling parties, the party challenging the settlement must prove theabsence of good-faith by a preponderance of the evidence. Johnson, 203 Ill. 2dat 132. The determination of whether a settlement has been executed in good-faithmust strike a balance between public policies promoting the encouragement ofsettlements and the equitable apportionment of damages among tortfeasors. Johnson, 203 Ill. 2d at 133; Dubina v. Mesirow Realty Development, Inc., 197 Ill.2d 185, 193-94, 756 N.E.2d 836 (2001) (Dubina). The court emphasized that asettlement agreement will not satisfy the good-faith requirement "if it conflictswith the terms of the [Contribution] Act or is inconsistent with the policiesunderlying the [Contribution] Act," based on the totality of the circumstances. Johnson, 203 Ill. 2d at 134; Ballweg v. City of Springfield, 114 Ill. 2d 107, 122-23, 499 N.E.2d 1373 (1986).

In accordance with the Contribution Act, the Johnson court noted, "[t]heamount of a settlement must be viewed in relation to the probability of recovery,the defenses raised, and the settling party's potential legal liability." 203Ill. 2d at 137. Quincy claimed absolute immunity under the Tort Immunity Act andRaytheon did not deny that, if Quincy were immune from liability, its third-partycontribution claims would be barred. Decedents' estates never sued Quincydirectly because of the diminished likelihood of success. As a result, noevidence was offered demonstrating that the settlement was motivated by a desireto impede a legitimate claim for contribution. The supreme court could notconclude that the nominal amount of the settlement and the resulting advantage forQuincy indicated the presence of bad faith and held that the settlement fell shortof collusion or wrongdoing. Johnson, 203 Ill. 2d at 138-39.

Here, the Settlement involves two of the three named tortfeasors and theirinsurers, rather than an agreement between plaintiffs and certain tortfeasors asin Johnson and other authority analyzing the underlying policies of theContribution Act. See Dubina, 197 Ill. 2d at 195-97 (settlement agreement of atort action for property damage was contrary to the terms of the Contribution Actwhere plaintiffs, as a condition of the agreement, assigned their causes of actionto a group of settling defendants, thereby depriving a nonsettling defendant ofits statutory right to a setoff); In re Guardianship of Babb, 162 Ill. 2d 153,172, 642 N.E.2d 1195 (1994) (Babb) (loan-receipt agreements violated theContribution Act as collusive because they allowed a settling tortfeasor torecover contribution from another tortfeasor whose liability was not extinguishedby the settlement, and attempted to deprive nonsettling tortfeasors of their rightto a setoff, which protects nonsettling defendants from paying more than their prorata share of the final damage judgment).

The Contribution Act provides that "[a]nyone who, by payment has dischargedin full or in part the liability of a tortfeasor and has thereby discharged infull his obligation to the tortfeasor, is subrogated to the tortfeasor's right ofcontribution." 740 ILCS 100/2(f) (West 2002). Accordingly, AAU, as subrogee, hasstepped into the shoes of Alberto, the subrogor, for the purpose of recoveringcontribution from the remaining tortfeasors for the $28 million it paid to Albertofor the hull loss. See Dix Mutual Insurance Co. v. LaFramboise, 149 Ill. 2d 314,319, 597 N.E.2d 622 (1992) (Dix Mutual Insurance); Gable v. Reznick, 183 Ill. App.3d 171, 173, 538 N.E.2d 1325 (1989).

Significantly, at the time of the settlement, AAU knew by virtue of itspolicy covering Alberto, as well as the Interchange Agreement, that potentiallyAAU also could be found Aon's primary insurer, as the circuit court later found. Any payments AAU made on Aon's behalf as its primary insurer, therefore, convertedAAU into Aon's subrogee, as well.

Here, unlike Johnson, the legal liability of a settling party, AonDefendants, was determined by a trier of fact prior to the execution of theSettlement. As noted earlier in this opinion, although Aon Defendants were found90% liable for the accident in the wrongful death case brought by the Whitenerestate, Aon Defendants in the present case effectively were released from anycontribution liability for the loss of the aircraft by virtue of the good-faithfinding. Nevertheless, AAU continues to pursue the Municipalities by seekingrecoupment of the $28 million hull loss in its subrogation action.

Although nonsettling defendants in a contribution setting may not be partiesto the settlements entered into by the settling tortfeasors, they may possessrights that are affected by those settlements. Bowers v. Murphy & Miller, Inc.,272 Ill. App. 3d 606, 610, 650 N.E.2d 608 (1995). An agreement cannot beconstrued as a good-faith settlement under the Contribution Act if the effect ofthe settlement shifts a disproportionally large and inequitable portion of thesettling defendant's liability onto the shoulders of another. Stickler, 325 Ill.App. 3d at 512.

In the case sub judice, considering Aon Defendants' 90% liability as foundby a trier of fact, the disparity between the settlement amount and claimeddamages, under the circumstances presented in this case, is a clear indicationthat the Settlement was not executed in good-faith. The nature of the Settlementand the settling parties' actions demonstrate the settling parties' motivation toimpede the Municipalities' claim for contribution from Aon Defendants. At thetime that AAU settled with Aon Defendants, AAU recognized that Aon Defendants andtheir insurers sought a ruling that Aon Defendants were insureds of AAU. The $2million payment from Aon Defendants, who eventually were found to be insureds ofAAU and the $4 million payment from Aon Defendants' insurers, in effect, amountsto a setoff that could prove to be a potential windfall pending AAU's success inits subrogation action against the Municipalities. Such a result violates thepolicy of the Contribution Act requiring the equitable apportionment of damagesamong tortfeasors. AAU additionally benefitted from the Settlement because itcollected its payment from Aon Defendants although an insurer may not pursuesubrogation against its own insured. See Dix Mutual Insurance, 149 Ill. 2d at323.

As a result of the good-faith finding, the Municipalities, who had no noticeof AAU's declaratory judgment action against Aon Defendants, are liablepotentially for the entire $28 million representing the cost of the aircraftbecause Aon Defendants were released from liability for the loss of the aircraft.AAU's failure to give notice of the declaratory judgment action or the Settlementto the Municipalities and its fortuitous concealment of the existence of itssubrogation claim against the Municipalities from Aon Defendants has allowed itto fashion separate litigation strategies on an identical claim in two separatecourtrooms without the fear of adverse admissions affecting the other case. TheSettlement has allowed AAU to manipulate the settlement process by minimizing itsexposure as a prospective indemnitor of Aon Defendants.

The totality of the foregoing circumstances illustrate a concert of actionby the settling parties that deprived the Municipalities of their rights under theContribution Act by causing them to pay a potentially higher amount than their prorata share, while minimizing the Alberto Insurers' exposure for indemnificationof the aircraft's value. Further, Aon Defendants' settlement payment was grosslydisproportionate to their relative liability, in conflict with the policy of theContribution Act. Dubina, 197 Ill. 2d at 196; Babb, 162 Ill. 2d at 172. Accordingly, the circuit court abused its discretion by granting Aon Defendants'motion for good-faith finding and dismissal.

The above findings also are outcome determinative of the appeals in docketnumbers 1-02-2797 and 1-02-2831 because, in effect, they grant the Municipalitiesthe relief requested in both their section 2-1401 motion and motion to stay. Reversal of the circuit court's good-faith finding requires the unresolved casesenumerated above to return to the same status prior to the court's grant of AonDefendants' motion for good-faith finding and the denial of the Municipalities'motion to stay. The court also must vacate its order granting Aon Defendants'motion to dismiss the Municipalities' third-party complaint. Based upon theforegoing, the issues raised in docket number 1-02-2797 and 1-02-2831 need not beaddressed further here.

Accordingly, the decisions of the circuit court of Cook County to grant AonDefendants' motion for good-faith finding and dismissal, deny the Municipalities'motion for relief from judgment under Code section 2-1401 and deny theMunicipalities' motion to stay the subrogation proceedings pending the outcome ofthe good-faith appeal are reversed and the cause remanded for further proceedingsnot inconsistent with the conclusions set forth above.

Reversed and remanded with directions.

THEIS, P.J., and GREIMAN, J., concur.

1. In addition to the policy, before the accident the two settling parties hadentered into a hold harmless and indemnity agreement which would have caused thesame effect, called the "Interchange Agreement."

2. On October 24, 2002, appellants' motion to consolidate the appeals wasgranted, but for hearing only. After further review and upon this court's ownmotion, however, the cases now are consolidated for disposition.

3. On November 2, 1996, the Alberto Insurers, AAU and the separate insurers,paid Alberto $28 million for the destroyed aircraft, which represented the agreedinsured value under the AAU insurance policy.

4. The August 6, 2002 order made this finding based upon its analysis of AAU'spolicy.

5. The Alberto Insurers' third amended complaint included Alberto as aplaintiff and eliminated Aon Defendants' insurers, USAU and USAIG as defendants. The fourth amended complaint, however, listed USAU as an intervening party (USAUalleged that Aon Defendants are insureds of AAU in their petition to intervene)and alleged the following: in count I, subrogation against Aon Aviation in theamount of $28 million; count II, a declaratory judgment finding no insurancecoverage in the underlying wrongful death lawsuits against Aon Corporation; incount III, a declaratory judgment that Aon Corporation was not a permissive userof the Alberto aircraft; in count IV, a declaratory judgment that Aon Defendantsare not the insured of AAU; and in count V, a declaratory judgment that AonAviation waived its right to seek coverage under the AAU policy issued to Albertopursuant to the Interchange Agreement.

6. All parties responded partially to the Municipalities' motion to compeland, in particular, the Municipalities were satisfied with Aon Defendants'response.

7. The Settlement does not "bar, preclude, waive, or prevent any additionalclaims, demands, defenses or causes of action that Releasors [Alberto Insurers andAlberto] have against the Released Parties [Aon Defendants, USAU and USAIG] or anyunnamed individuals or entities for damages other than those specifically releasedby this agreement and Releasors specifically reserve all claims, defenses, demandsor causes of action Releasors have, if any, against the following, but not limitedto" the wrongful death lawsuits, declaratory judgment action and theMunicipalities as set forth in the subrogation action that AAU filed against theMunicipalities.

8. In granting Aon Defendants' motion, the circuit court stated:

"Aon is the only one that has an interest in a good-faithfinding. A good-faith finding is not a condition of thesettlement agreement, as the record indicates, betweenAon and Alberto. I think stripped to its bareessentials, the contractual claims between the variousinsurers and Aon and Alberto has nothing at all to dowith the hull damage claim that Alberto is making againstAon. I view this as a prosaic tort claim. I understandthe conspiracy theory that the interveners are urging,but I find it unpersuasive. Accordingly, I will enter agood-faith finding."